–Guyana moves from being net importer of agricultural products, mineral fuels to being net exporter of those commodities
–country’s oil sector expected to expand by 113% this year, non-oil economic growth to reach 9.6%, IDB says

GUYANA continues to stand strong against the mounting global economic challenges, and this is evidenced by the Inter-American Development’s (IDB)’s latest projection that the country’s volume of exported goods could increase by 50 per cent over the next four years, 2022 to 2026.

In its latest report titled: “Caribbean Economics: Headwinds facing the post-pandemic recovery,” the IDB said the current global context of high commodity prices affects countries differently, depending on whether they are mainly commodity importers or exporters, and directly affecting their terms of trade.

“Countries that mainly export products that attract price increases benefit from improved terms of trade, which means imports become relatively cheaper, supporting a country’s purchasing power. For Guyana, this development is two-fold, since the country is not only benefitting from higher energy prices but also from higher levels of oil production,” the IDB report stated.

Specific commodities such as oil and aluminum are projected to have relatively high prices through 2024. The average price of the main oil benchmarks (Brent, WTI, and Dubai) reached a high of US$98 per barrel in 2022, up from US$61 before the COVID-19 pandemic.

According to the IDB, the price is expected to remain over US$80 through 2024, before dropping to US$71 by 2027. Similarly, aluminum prices were 50 per cent higher in 2020 relative to pre-pandemic levels and are expected to remain around 40 per cent higher through 2027.

Soybean prices are also expected to remain around 40 per cent higher than the pre-pandemic level in the medium term, international prices have remained relatively stable (IMF 2022a). Gold prices are currently about 30 per cent higher than in 2019.

“These price trends, and, more importantly, Guyana’s higher levels of oil production, have significantly affected the profile of the country’s net trade in agricultural products and mineral fuels with the rest of the world.

“Guyana rapidly moved from being a net importer of agricultural products and mineral fuels, representing eight per cent of GDP in 2018 and 2019, to being a net exporter of the same commodities, with a trade surplus of 16 per cent of GDP [Gross Domestic Product] in 2020 and 31 per cent in 2021 with the rest of the world. Prior to oil production, Guyana’s main suppliers driving the trade deficit 31 in these products were the Caribbean Community (CARICOM) countries,” the IDB said.

The international financial institution said, for Guyana, after the start of oil production, the main destinations of trade surplus were North America and other countries outside of North and South America. The share of net exports to these countries increased through 2021, reaching 17 per cent of GDP for net exports to North America and 14 per cent of GDP to other countries.

As oil production continues ramping up, these trade surpluses are likely to continue growing. The oil sector is expected to expand by 113 per cent in 2022, accounting for approximately 90 per cent of GDP growth this year.

The non-oil economy is also projected to have a better-than-expected turnout of 9.6 per cent for 2022 compared to 7.7 per cent projected in the country’s 2022 budget.

The main drivers of growth in the non-oil economy, according to the IDB, include agriculture, services, and construction, which are projected to grow by 11.9 per cent, 6.3 per cent, and 19 per cent, respectively, all higher than originally estimated in the budget.

“Led by President [Dr. Irfaan] 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 had said.

He related that upon the assumption of office by the President Ali-led government, the administration recognised the importance of a strong, diversified economic base, and, as such, even in the early days of oil production, placed the highest level of importance on a resilient non-oil economy.

The aim, therefore, was to modernise the economy’s traditional pillars, and catalyse “a rapidly growing and highly competitive non-oil economy.”