major macro economic indicators
|2020||2021||2022||2023 (e)||2024 (f)|
|GDP growth (%)||43.5||20.1||62.3||37.2||45.3|
|Inflation (yearly average, %)||1.2||3.3||6.5||6.6||5.5|
|Budget balance (% GDP)||-7.8||-7.3||-5.2||-5.0||-1.9|
|Current account balance (% GDP)||-16.3||-25.6||27.3||27.9||27.3|
|Public debt (% GDP)||51.1||43.2||27.8||29.8||24.2|
(e): Estimate (f): Forecast
- Attractive prospects for investors in mining, hydroelectric power and agriculture
- Abundant offshore oil and gas reserves, under development since 2020
- Member of the Caribbean Community and Common Market (CARICOM)
- Dependence on natural resources (gold, bauxite, sugar, rice, wood and, above all, oil since 2020)
- Inadequate transport, electricity, education and health infrastructure
- Lowskilled local workforce and mass emigration of skilled workers
- Sensitivity to climatic events (hurricane-prone region)
- Dependence on international creditors
- High crime rate linked to drug trafficking in a context of poverty and corruption (ranked 85/180 by Transparency International's Corruption Perceptions Index in 2022)
The boom in the oil sector, the driving force behind durably stellar growth
In 2024, the economy will continue to perform strongly, with growth well ahead of neighbouring countries thanks to increased production in the oil sector. The major discoveries of oil resources in the Stabroek block, exploited by the consortium of ExxonMobil, Hess and CNOOC, have propelled the country to the rank of the third-largest commercially exploitable oil reserve in Latin America and the Caribbean, with an estimated 11 billion barrels. With offshore exploitation already under way (two fields in production, Liza-1 since 2021 and Liza-2 since 2022), daily production quadrupled between 2021 and 2023 and should continue to rise sharply in 2024 thanks to the start of production at the Payara field to reach 700,000 barrels per day. The economy will also continue to benefit from high oil prices, which are expected to rise. Oil production will continue to generate significant public and foreign investment: the projects currently under development are estimated by the operating consortium at USD 42.5 billion and new investors should be attracted by the upward revision of medium- and long-term production forecasts. Non-oil activity, particularly construction and services, will be boosted by the positive impact of the oil sector and the need for investment in infrastructure. The reforms made in 2023 to the Local Content Act, enacted in 2021 to stimulate the local economy, aim to integrate the growth of the oil and gas industry more fully with the introduction of specific provisions for the sector, and should help to strengthen the trickle-down effect on the local economy. Business will also benefit from the robust momentum of the gold sector (gold accounted for 5% of exports in 2022), which is still trading at a high price. Inflation, which has remained in single digits, unlike in most neighbouring countries, will fall slightly, in line with moderating global food prices. However, public spending and the rise in real wages due to the spin-off from the oil sector will keep inflation above pre-pandemic levels. The volatility of global oil prices is one of the main risks to economic growth. The agricultural sector, which could suffer from droughts brought on by the El Niño weather phenomenon, which would affect its production as well as the price of imported agricultural products.
Public and external accounts bolstered by oil windfall
The oil sector will generate solid public revenues through the royalties and taxes associated with it, and should be supported by the durably high prices of energy products. Revenues will also be boosted by the ongoing negotiation of value-added sharing between operating companies and the government for future contracts, as part of the award of 14 oil blocks. Expenditure will remain high despite the gradual reduction in tax subsidies granted to consumers against a backdrop of high inflation. Economic development is accompanied by large-scale public spending plans, particularly in the areas of health and education (increase in the allowance for the elderly, “Because we care” student grants, etc.), as well as costly efforts to expand the capacity of administrations to improve the implementation of public policies and the management of large capital expenditures. The deficit will be financed mainly from the reserves of the Natural Resources Fund (replenished upstream by oil revenues), thereby reducing the public debt.
The current account will again record a very large surplus, mainly thanks to the positive trade balance. High oil prices and rising oil production will support exports, far outstripping the rise in imports of capital goods needed for oil and mining operations and for projects generated by public investment. The trade balance will also continue to benefit from large gold exports. This trade surplus will continue to more than offset the deficits in services and revenues associated with the activities of foreign oil companies.
Local elections confirm PPP's power
President Irfaan Ali of the centre-left People's Progressive Party/Civic (PPP) took office in August 2020 following a political crisis. He succeeded David Granger, who headed a multi-ethnic coalition, the People's National Congress or PNC, led by APNU (A Partnership for National Unity) and its young ally, AFC (Alliance for Change). The political environment in Guyana has historically been characterised by racial and ethnic divisions, which often influence electoral preferences and political alliances. While the Indo-Guyanese community largely supports the PPP, the Afro-Guyanese population favours the APNU due to historical friction between the two parties, which generates political friction. Mr Ali's party has 33 seats in Parliament, giving it a narrow majority in the 65-seat National Assembly (the APNU and AFC coalition has 31 seats). The local elections, initially scheduled for 2020 and finally held in June 2023, strengthened the PPP’s power, including in regions historically dominated by opposition parties: the party was elected in 67 of the 80 regions at stake. However, the significance of this victory is put into perspective by the low turnout (35%) and the lack of coordination between the opposition parties. Political stability is expected to last until the next presidential elections, due in 2025, despite the resurgence of social tensions between the Indo-Guyanese and Afro-Guyanese communities in the run-up to the local elections. Since taking office, Mr Ali's government has softened its criticism of the production-sharing agreement concluded in 2016 by the APNU with ExxonMobil (considered to be excessively favourable to the company). In August 2022, the government reaffirmed its commitment to abide by the agreement, while ensuring that future contracts with other oil and gas companies would be more favourable to the country: the award of 14 future oil blocks will thus be carried out under new conditions, more beneficial to the government and defined by a new framework adopted in April 2023. Despite persistently high levels of corruption (with Transparency International's Corruption Perceptions Index ranking the country 85th in the world in 2022), the country's participation in the Extractive Industries Transparency Initiative (EITI) should help to ensure that the oil windfall is properly managed.
Last updated: September 2023