Caribbean & Central America - October 2024

Guyana’s oil-and-gas fuelled economic boom is still in full swing, with first half GDP growth reaching a massive 49.7% compared to the same period last year. This makes it the fastest-growing economy in the Western Hemisphere.

President Irfaan Ali welcomed the news; the government said that in the light of the latest data, it is now raising its full-year GDP forecast by ten percentage points to 42.3%. International bodies are a little more cautious, with the International Monetary Fund (IMF) saying GDP will rise this year by 33.9%, while the United Nations Economic Commission for Latin America and the Caribbean (Eclac) projects 29.2% growth.

The oil and gas sector is clearly the engine of Guyana’s economic boom. During the course of this year crude oil production is expected to surge by 60% to 228m barrels. In November last year Guyana took delivery of ‘Prospera’, its third floating production storage and offloading vessel (FPSO) which has allowed an increase in output to 624,000 barrels per day (bpd). The price of Brent crude averaged US$84 a barrel in the first half, up by 5.2% on the same period last year. The increase in output means Guyana is on track to overtake Venezuela as South America’s second-largest oil producer, after Brazil.

One measure of success is whether oil and gas growth can spill-over and lift the non-oil economy in a sustainable manner. President Ali was optimistic, noting that in the first half non-oil GDP grew by 12.6%. Since 2022 the finance ministry has been following a plan to use oil revenues to invest in agriculture, transport infrastructure, schools, hospitals, and labour force training. The government has high hopes of benefiting from business process outsourcing (BPO) and has built two campuses for BPO call centres. Sugar cane and gold output dropped because of a drought, but there were double digit percentage increases in sectors such as fisheries, mining, manufacturing, and construction.

The opposition People's National Congress Reform (PNCR)/A Partnership for National Unity (APNU) responded to the latest growth data with a warning that all may not be as positive as it sounds. Economic adviser to the opposition, Elson Low, said that despite high growth and rising oil output most Guyanese cannot see their own economic situation improving. He was cited by the local media as accusing the government of offering teachers an insufficient and “anaemic” salary increase. Low questioned whether the desired improvement in the non-oil economy is really happening. As he put it, “one must ask whether the non-oil economy should not be performing far better in terms of greater production, high productivity, more value-added and wider diversification”.

Criticisms

Economic adviser to the opposition, Elson Low, was also cited by the local media as saying that among additional measures, he wants to see easier access to credit, infrastructure investment targeted on improving productivity, and “simplified and depoliticised” access to land.