Guyana recorded the highest growth rate in the world last year and the International Monetary Fund (IMF) now projects that the economy will continue expanding “extremely fast” this year.
This was highlighted in a concluding statement issued by the IMF following the 2023 Article IV Mission. This statement essentially details the preliminary findings of IMF staff after an official visit.
The release stated, “The Guyanese economy continues to grow very rapidly, supported by the government’s modernization plans, including the unparalleled oil sector expansion.
“Following record real GDP growth in 2022— 62.3 percent, the highest in the world—real GDP is expected to continue to grow extremely fast in 2023 (38 percent).”
For context, Real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy (in this case, Guyana’s economy) in a given year. In simpler terms, the real GDP measures a country’s total economic output, adjusted for price changes.
Much of Guyana’s growth is linked to its nascent oil and gas sector. This has been the case over the past few years and the IMF noted that this sector will continue to expand in the coming years.
And the IMF noted that spillovers from oil and construction are supporting growth in the services and supplies sectors. Agriculture, mining and quarrying are also performing “well,” the IMF said too.
Days before, the government released statistics on Guyana’s economic performance at the half-year mark and projections for the rest of the year.
According to the half-year report issued by the Finance Ministry, growth in overall real Gross Domestic Product (GDP) is estimated at 59.5 per cent in the first half of the year, with the non-oil economy growing by 12.3 per cent.
It added that the revised full year real GDP growth in 2023 is now projected at 28.2 per cent and 9.3 per cent for the non-oil GDP.
The report also detailed varying expansions in most sectors. There was nearly a 100 per cent increase in economic activity in the oil and sector; the agriculture, fisheries and forestry sector expanded by 7.6 per cent.
Declines were, however, noted in the areas of gold and bauxite mining.
Despite the seemingly positive outlook for Guyana, the IMF staff recommend a continued focus on maintaining macroeconomic stability through an “appropriate policy mix.”
“Staff recommend continuing close monitoring of macroeconomic and financial indicators, tightening monetary policy stance and using macroprudential tools as needed (e.g. loan-to-value ratio or debt-to-income requirements). In the medium term, staff recommend a review of the exchange rate framework to ensure that it best serves the economy,” the statement noted.