— IMF projects 86 per cent growth in real GDP

GUYANA’S economy is expected to balloon in 2020 following the production of oil for the first time in the country’s history.

According to the International Monetary Fund (IMF), Guyana’s real Gross Domestic Product (GDP) is expected to grow by approximately 86 per cent in 2020, almost 20 times more than the projected 4.4 per cent growth for this year. A report from Bloomberg stated that Guyana’s GDP will grow 14 times as fast as China’s next year.
Guyana’s $4 billion annual GDP is also expected to expand to about $15 billion by 2024, said the IMF. The commencement of oil production in 2020 will substantially improve Guyana’s medium and long-term outlook.

The petroleum sector is projected to grow rapidly; it will account for around 40 per cent of GDP by 2024 and support additional fiscal spending annually of 6.5 per cent of non-oil GDP on average over the medium term. This will help meet critical social and infrastructural needs

The IMF, however, said that the projected real GDP growth in 2020 is potentially overstated and is subject to large subsequent revisions, because of the very high growth rate of oil GDP. This in turn is elevated on account of the very low base in 2019.
“Hence, even small changes to the projected oil output in 2020 would result in large changes in real oil GDP and overall real GDP growth rates. Work is ongoing to rebase the real GDP series to account for oil-related activities since 2015 in advance of actual oil production in 2020,” said the IMF.

CONSISTENT GROWTH
Further projections by the IMF showed that real GDP will grow by 4.8 per cent in 2021, 20.6 per cent in 2022 and 26.2 per cent in 2023.

Looking back at the growth in 2018, the IMF said Guyana’s economic growth strengthened that year with broad-based expansion across all major sectors. Real GDP grew by 4.1 per cent, led by the construction and service sectors, up from 2.1 per cent in 2017.
Guyana continued to show positive results in 2019, with the country recording economic growth of four per cent for the first half of the year.

“At the half year we have grown four per cent year-on-year, which is basically measuring the first half of the year to the same period last year,” said Minister of Finance Winston Jordan in a report which was published in August.

The minister recalled that the economy grew in 2015 and later grew again in 2016 by 3.4 per cent. He said although growth was less in 2017, the country recorded the highest growth rate in 2018 which was 4.1 per cent, the highest since 2014.
The latest estimate is for growth to be 4.5 per cent at the end of the year, but Jordan believes that people can do “mischief” to derail the growth. With the possibility of growth being derailed, Jordan said government will do all in its power to ensure that growth is held in check.

PREPARATION
More work is expected as first oil in Guyana can begin as soon as December, ahead of the previous March 2020 timeline; Jordan had said that efforts will be made to speed up local preparations for the shipment of crude.
The announcement of this earlier timeline was made on Wednesday by HESS Corporation, a partner of ExxonMobil which holds a 30 per cent interest in the Stabroek Block.
In a report on Wednesday of the company’s Third Quarter of 2019, HESS Chief Executive Officer (CEO), John Hess said: “In September, we announced our 14th discovery in the Stabroek Block at Tripletail offshore Guyana and are now targeting December for first oil from the Liza-1 development.”

HESS noted that Exxon and its partners’ 14th discovery was announced on the Stabroek Block at the Tripletail-1 exploration well located approximately three miles north-east of the Longtail discovery. The Tripletail discovery adds to the six billion barrels of oil equivalent. The Liza Phase 1 project will produce up to 120,000 barrels of oil per day at peak rates utilising the Liza Destiny FPSO.

It is expected to generate over $7B in royalty and profit-oil revenues for Guyana over the life of the project. The Noble Bob Douglas drillship is currently completing development drilling operations for the Liza Phase 1 development.
Meanwhile, Tullow is also on stream for big things, since the company made two oil discoveries recently. The company made discoveries at the Joe-1 and at the Jethro-1 wells.
A recent Competent Persons Report on the block, prior to the discoveries on the Jethro and Joe wells, estimated that there is a gross 3,982 million barrels of oil equivalent in the Orinduik Block.

Considering the recent oil finds, Rystad Energy ranked Guyana second for the most oil discoveries for this year. The country was also named the fastest-growing economy in the world by the Nasdaq Stock Exchange.