CONSISTENT growth in Guyana’s non-oil sectors stimulated by prudent fiscal management and sound policies implemented by the incumbent People’s Progressive Party/Civic (PPP/C) administration, is evidence that the oil-producing nation is quite capable of avoiding the “Dutch Disease.”

According to the International Monetary Fund (IMF), the “Dutch Disease” refers to the detrimental consequences of a sudden boom in a country’s economy.

There is no doubt that the “Dutch Disease,” or natural resource curse, is real, as its effects have been documented in many academic papers and reports. A prime example of the effects of this phenomenon, as highlighted in a paper published by the Inter-American Development Bank (IDB) titled, “The Dutch Disease Phenomenon and Lessons for Guyana: Trinidad and Tobago’s Experience,” was the situation in neighbouring Venezuela which sits to the west of Guyana.

According to the report, the nation, which has recoverable oil resources of approximately 298.3 billion barrels, was unable to translate its wealth into sustainable economic growth and prosperity for its citizens. And owing to its heavy reliance on its oil-and-gas sector, the country faced economic recession and other challenges.

In Guyana, contrary to claims by the political Opposition that declines in some economic areas at the end of the first half of 2022 are early signs of the “Dutch Disease,” experts believe that the country’s overall economic performance is testimony of the nation’s ability to avoid the natural resource curse.

Using empirical data and facts regarding Guyana’s economic position, Executive Director of the Georgetown Chamber of Commerce and Industry (GCCI) Richard Rambarran, and Financial Analyst Joel Bhagwandin, determined that Guyana is not only in a position to avoid the “Dutch Disease,” but the country is also becoming an example for other countries to follow, especially from a macroeconomic management standpoint.

The nation, which, like many other countries was affected by COVID-19 and the war between Ukraine and Russia, managed to record positive economic growth over the past two years. Most recently, it was reported that the country recorded real Gross Domestic Product (GDP) growth of 36.4 per cent, and non-oil growth of 8.3 per cent at the end of the first half of 2022.

The outlook for the second half of the year continues to be favourable, with real GDP now projected to reach 56 per cent by the end of this year, and non-oil GDP growth at 9.6 per cent, maintaining Guyana’s position of global leader in economic growth.

“…the first half of this year was affected by the pandemic, and the war between Russia and Ukraine… what that did was create adverse economic conditions, and if you have an economy still experiencing positive rates of economic growth in a global context where economic prospects are dampened, then you have an economy which, in my view, speaks volumes to macroeconomic management,” Rambarran said.

Commenting on the projections for Guyana, the economist said: “Non-oil growth is above what economists refer to as the golden rule of growth, which is around 4-4.5 per cent… that is extraordinarily important… with the sectors and sub-sectors poised to grow, you will find we are on the way and already putting measures in place to avoid the natural resource curse.”

In his view, the economy is poised for rapid take-off, and once weather is favourable, sugar and rice will rebound, and so too will the manufacturing sector, once global conditions reach pre-pandemic levels.

Growth in non-traditional sectors such as wholesale and retail trade and construction are also evidence of the country’s bright economic prospects. According to the Ministry of Finance’s Mid-Year Report for 2022, wholesale and retail trade grew by17.2 per cent, while the construction sector expanded by 20.4 per cent.

Growth in the construction sector is especially promising, because investments in this area produces the best multiplier effect: an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

This, however, forms only part of the government’s infrastructural plan and wider masterplan for rapid development.

“Led by President Ali, and fuelled by the rapid economic growth, we have embarked on a period of rapid transformation, and our government has laid out a masterplan 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,” Senior Finance Minister Dr Ashni Singh said in the recent mid-year report.