THE Ministry of Finance recently released the Mid-Year Report 2022 on the theme of “Steadfast Against All Challenges, Resolute in Building Our One Guyana,” which explores the extensive progress and development across Guyana’s economy over the last six months.

At the start of the year, Guyana approved its largest budget in history, G$552.9 billion, which included oil revenues for the first time. For the first half of the year, Gross Domestic Product (GDP) grew by 36.4 per cent, attributed mostly to the oil-and-gas industry, while the non-oil economy grew by 8.3 per cent.

Promisingly, growth was not confined to oil, despite a tough global economic climate. Almost all non-oil sectors showed growth in the report for the first six months of the year.
The service industries are estimated to have expanded by 7.6 per cent; the mining and quarrying sector by some 64.6 per cent due to high gold prices; the agriculture, forestry and fishing sectors saw an estimated 10.9 per cent growth; while the construction sector is estimated to have grown by a strong 20.4 per cent in the first half of 2022. Meanwhile, growth across the region is expected to be just three per cent, according to the report.

Finance Minister Dr Ashni Singh, recently pointed to plans by the administration to usher in diversification and transformation. “Led by President Mohamed Ali and fuelled by the rapid economic growth, we have embarked on a period of rapid transformation, and our government has laid out a master plan for the rapid development and transformation of Guyana. More importantly, we have demonstrated the capacity and commitment to working assiduously to make this vision a reality, so that benefits can [redound] to citizens in the shortest possible time,” said Dr. Singh.

The latest Economic Commission for Latin America and the Caribbean (ECLAC) report shows that while the Caribbean is the only sub-region to record growth in 2022, it “faces a complex economic panorama in 2022 and in the years to come. Added to the lower economic growth are strong inflationary pressures, low dynamism in job creation, falls in investment and growing social demands.”

For example, Suriname grew by a negative 3.5 per cent in 2021, according to the World Bank, in stark contrast to Guyana’s double-digit growth. Even Trinidad has been struggling with a stagnant economy and faces declining oil-and-gas production.

The rapid expansion of Guyana’s oil sector means it is projected to account for nearly 60 per cent of GDP for 2022, but the government is working to build a more diversified economy with its oil revenues beyond its energy sector.

It is a remarkable testament to that growth in oil that Guyana continues to notch one of the world’s fastest growth rates despite a downturn of the global economy due to the pandemic and volatile energy markets.
Global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022, according to the World Bank’s latest Global Economic Prospects report.

All of this is the surest sign yet that Guyana’s oil sector is a necessary bulwark to the unsteadiness in the global economy, especially since the country has been able to capitalise on the skyrocketing commodity prices for oil, which ultimately puts more revenue in the country’s pockets to benefit the people.

In the mid-year report, it’s evident that the government’s main aim is to modernise traditional sectors by incentivising investment and innovation. For example, the expected energy savings in the gas-to-energy project will go a long way to propelling more manufacturing and increasing the share of disposable income to be spent in the broader economy.

Since the release of the 2022 budget, the government has outlined plans to use its oil wealth to limit reliance on borrowing from the sovereign debt market and multilaterals and to curtail any new debt or taxes that could impact the people.

As other sectors record growth, investments being made are likely to position Guyana as a regional market leader. Continued investment in infrastructure made possible by earnings from the oil-and-gas economy will create more opportunities in other sectors.

The more Guyana diversifies its economy, the more it fosters an environment where companies can provide high-paying jobs in a variety of traditional sectors—avoiding brain drain or too much concentration in one industry. The government’s push to diversify the economy with capital from the energy sector is likely to continue to positively impact sectors such as agriculture, education, and health, with strong growth expected for years to come as oil revenues continue to increase.