The intensification of efforts to curtail the spread of COVID19 has resulted in many private sector enterprises operating on reduced hours or closing their doors indefinitely, as we await further guidance from the government as the situation continues to develop.

In a similar manner, public sector organisations have also implemented measures aimed at combatting the spread of COVID19. Collectively, the work force, formal and informal, have been greatly affected by COVID19. Consequently, concerned citizens are anticipating that we could be looking at some form of financial crash or recession, as many other nations in the world, prepare for the worst. According to the International Monetary Fund (IMF), the expected downturn as a result of COVID19 could cause the “worse economic fallout since the Great Depression”.

COVID19 will indeed have an effect on our economy as we have already seen businesses sending home workers without pay and/or dismissing workers until further notice. What remains to be seen however is the medium to long term effect the pandemic could have on Guyana’s economy, if any. According to Rawle Lucas, an Economist and member of the Board of Directors at the Bank of Guyana, COVID19 has had a negative effect on global production, consumption and capital accumulation which are all root factors in a financial crisis. Mr. Lucas stated “If people don’t have money then they can’t buy anything; if people are not buying then people will not produce because they can’t sell it. So, the way in which I would look at it from a general sense is to say that we have to find a way to put money in than hands of people”.

Whilst most of the news surrounding COVID19 is negative in its outlook, especially in the economic sense, Guyanese should be comforted by our economy’s ability to withstand the resultant economic downturn from COVID19. There are a number of reasons to adopt this position. Firstly, during the 2008/09 global financial crash/recession which was at the time, the worst since the Great Depression, Guyana’s economy was able to withstand the downturn because of gold. At the time of the recession, gold prices jumped exponentially as demand for the mineral grew. Traditionally, gold is referred to as a “safe haven” in financial markets, meaning that in times of volatility, investors usually pin their money on gold weathering the storm.

Secondly, Guyana recorded 4.7% economic growth in 2019, largely owing to the rapid growth of the nascent tourism and hospitality sector which in 2019 alone raked in approximately $67 billion dollars. Much of this growth was expected to continue in 2020 as Guyana became the number 1 eco-tourism destination in the world. However, since the emergence of COVID19 and the restriction on domestic and international travel, growth in this sector has been severely disrupted, not only in Guyana but in other nations which are dependent on the tourism and hospitality sector. Fortunately for Guyana, our economy does not depend solely on the success of the tourism and hospitality sector, and though its contribution to our economic growth has been marked, it has not yet become a lynchpin or measure of our economy’s true potential for growth.

Thirdly, more growth is expected to follow. Since the discovery of vast oil reserves offshore, various financial entities have predicted the growth trajectory of the Guyanese economy. The IMF last year said that our $4billion annual GDP is respected to reach approximately $15billion by 2024 as our nation is predicted to be amongst the world’s largest per-capita oil producers by 2025. Similarly, the NASDAQ had listed Guyana as the fastest growing economy in the world and projected our growth rate at 16.3% from 2018-2021. Based on previous years of economic growth, Guyana’s economy is expected to continuing growing at 33.5% this year and 22.9% next year in 2021, according to the NASDAQ analysis. According to the World Bank, real gross domestic product (GDP) at constant market price is expected to be 51.7% and is expected to continue into 2021 and 2022, with real GDP growth expected to be 8.7% and 2.6%. In short, our economy has been pegged to experience exponential growth in the next five years due to the nation’s new-found oil wealth, the first profits of which were secured only last month.

The current pandemic requires assurances that Guyanese will be taken care of financially as we continue to weather the COVID19 global pandemic. The government needs to put together some form of financial stimulus package to ensure that citizens are able to meet their basic needs. That being said, the current political impasse must be addressed as soon as possible so that a legitimate government is able to work out and mitigate any potential damage to our economy.