–says regional forecast weaker without this nation’s input

AT a time when the global economy is plagued with myriad uncertainties, Guyana remains one of the fastest growing nations in the world, with an economy that is projected to expand by a massive 49.7 per cent this year, according to the latest edition of the World Bank’s “Global Economic Prospects”.

The report, issued on Tuesday, indicates a significant improvement from the one released in June 2021, which estimated Guyana’s growth at a mere 23.7 per cent.

This means that within the last few months, Guyana’s economic potential has doubled, as measured by the country’s Gross Domestic Product (GDP).

Based on the World Bank report, Guyana is the only country in Latin America and the Caribbean which is expected to record double-digit growth this year. Coming a close second is St. Lucia, which is expected to record economic growth of 9.6 per cent.

Even further, the January 2022 report now estimates a 2023 growth of some 25 per cent for Guyana, as opposed to the previously predicted 23 per cent. And, even this projection could very well be revised in the coming months.

Meanwhile, economic growth in the wider Caribbean is estimated to reach 7.3 per cent this year, and 5.9 per cent in 2023. However, this doesn’t necessarily mean good news for the region, since, according to the report, those improvements reflect a large contribution from Guyana.

“The small states sample excludes commodity-reliant Guyana, which is experiencing a growth boom due to rapid offshore oil industry development,” the World Bank notes in its report.

It related, too, that excluding Guyana’s growth predictions from the Caribbean would make the projections substantially weaker, at 4.6 per cent in 2022 and 4.2 per cent in 2023.

This is due largely to the fact that the majority of Caribbean countries are reliant on their respective tourism industries, which have taken significant hits due to the continuous spread of the novel coronavirus (COVID-19) and the global pandemic it has triggered.

The report informs that the durability of economic recovery in Latin America and the Caribbean, as elsewhere, is contingent on control of the pandemic.

“A resurgence in new COVID-19 cases, including the Omicron variant, could temporarily disrupt activities in some countries,” the World Bank projects.

Even in this regard, however, Guyana’s recovery prospects remain much higher, given the country’s robust vaccination programme.

Guyana’s resilience was seen in 2021, when, despite battling the pandemic and months of unprecedented floods, the country’s economy remained resilient, and at half year was able to record positive growth, largely owing to contributions from the country’s burgeoning oil-and-gas sector.

With approximately 28 lucrative offshore discoveries since 2015, the International Monetary Fund (IMF) had estimated that in 2021, petroleum earnings will account for some 38.2 per cent of Guyana’s GDP.

INCREASED EARNINGS
Notably, it was reported that total output from the petroleum sector had increased by 65.4 per cent when compared to the same period in 2020. Moreover, in the coming months, as ExxonMobil and its partners ramp up oil production activities, Guyana’s oil earnings could potentially double by 2025.

Minister of Natural Resources Vickram Bharrat had previously said that Guyana could possibly begin facilitating 50 oil lifts per year, at one million barrels per lift, thereby producing 50 million barrels of oil annually.

Those increased lifts, the minister related, are possible with the operation of three additional Floating Production Storage and Offloading (FPSO) vessels. Those include the Liza Unity, which recently arrived; the Prosperity FPSO, which is currently under construction; and the Yellowtail FPSO, which is slated to come on stream by 2026.

Further, with crude prices hovering at US$80 a barrel, Guyana would earn as much as US$4,000,000,000 (G$836,902,800,000) each year for its 50 oil lifts. Minister Bharrat also predicted that with the country’s eighth oil lift, which was done in November, Guyana could earn some US$85 million, if oil prices remain around US$85 per barrel.

“So, when you crunch the numbers, 50 lifts at a million barrels, and based on the oil price today, if it continues along that trend, you can see or get an idea of the direct proceeds coming to Guyana,” Minister Bharrat related.
The country currently has untouched oil earnings totalling US$534 million, which currently sits in the US Federal Reserve Bank.

Aside from oil, Guyana has also recorded strong performances in several other sectors, such as the construction sector, which grew by 25.5 per cent in the first half of 2021, reflecting increased emphasis on implementing the public sector investment programme, as well as increased private sector construction, which reflects improved private sector confidence and optimism regarding the economic outlook.

Outside of the Latin America and the Caribbean region, the World Bank says that global economic growth is projected to see notable reductions from 5.5 per cent in 2021 to 4.1 per cent in 2022, and even further by 3.2 per cent in 2023.

The Bank attributes the expected decline to the emergence of the rapid spread of the Omicron variant of the coronavirus, which it says: “Indicates that the pandemic will likely continue to disrupt economic activity in the near-term.”