The International Monetary Fund (IMF) has released an assessment of Guyana’s economy that recognises the role public investments from Government has played in non-oil economic growth. Further, the IMF projects that Guyana will continue its reign as the fastest growing economy in the world for 2023.
During their sojourn in Guyana, the IMF team led by Alina Carare, met with Vice President Bharrat Jagdeo, Finance Minister Dr Ashni Singh, Minister of Parliamentary Affairs and Governance Gail Teixeira, Bank of Guyana Governor Dr Gobind Ganga and other senior public and private sector officials and stakeholders.
Having completed its 2023 Article IV consultations, the IMF noted that Guyana’s Gross Domestic Product (GDP) continues to record strong growth. They projected that Guyana will record extremely fast real GDP growth of 38 per cent in 2023. Last year, Guyana recorded real GDP growth of 62.3 per cent – the highest in the world. And according to the Fund, public investment had a major role to play in non-oil economic growth.
“Oil production is ramping up with the coming on stream of a third oil field, and growth in the non-oil sector is supported by the implementation of a fast-paced public investment programme focused on providing transportation, housing, and flood management infrastructure, and raising human capital.”
“Spillovers from oil and construction are supporting growth in the services and supplies sectors, while agriculture, mining and quarrying are also performing well.”
“The external current account swung into a large surplus in 2022, of 23.8 percent of GDP, and another large surplus is expected in 2023. Banks are well capitalized and liquid,” the IMF said.
According to the IMF, oil production will continue to expand rapidly as three new approved fields will come on stream between 2024-27, a reference to the Payara, Yellowtail and Uaru, and a sixth field is expected to come on stream in the first half of 2028, a reference to Whiptail.
“Sustained real non-oil GDP growth of 5.5 percent is projected, as the government continues its ambitious plans to address developmental needs. Guyana’s favourable medium-term growth prospects are accompanied by upside and downside risks. On the upside, further oil discoveries would continue to improve growth prospects,” the IMF said.
However, the IMF team warned that while the growth of the construction sector and strong public investment may boost short-term non-oil growth, it could also lead to inflation and the appreciation of the real exchange rate.
Additionally, the IMF warned against overheating the economy and crowding out credit to the private sector, adding that adverse climate shocks, and volatile or lower than projected commodity prices, can also negatively impact the economy.
Guyana has already recorded a whopping 59.5 per cent real economic growth in the first half of 2023, driven not only by the oil and gas sector, but also the non-oil economy which has been growing for successive years.
This was contained in the recently released Ministry of Finance Half Year Report, which presents stats on Guyana’s economic performance for the first half of the year. The non-oil economy, according to the report, grew by 12.3 per cent. According to the report, the growth trend is expected to continue.
The report further disaggregates the growth by sectors. For instance, the gold mining and quarrying sector is estimated to have grown by 89.9 per cent in the first half of the year, driven by increased output. The report explains that these increases outweighed the declines observed in the gold mining and bauxite mining subsectors.
Meanwhile, agriculture, forestry and fishing sectors are estimated to have expanded by 7.6 per cent in the first half of the year. This was driven by growth in all subsectors – namely other crops, rice growing, livestock, fishing, forestry, and sugar.
In the sugar sector, growth was recorded at 30.1 per cent when compared with the first half of last year. The Guyana Sugar Corporation (GuySuCo), according to the report, produced 17,034 tonnes of sugar in the first crop of this year.
This is an improvement of the 13,089 tonnes recorded in the first half of 2022, and according to the report, this is because of improved weather and yields. Meanwhile, the rice sector has also grown.
