Guyana's Oil-Driven Economic Boom To Continue Into 2024

• The recent oil-driven boom in the Guyanese economy will continue in the near term. Fitch Solutions forecast real GDP growth of 29.5% in 2023, followed by a further expansion of 23.5% in 2024.
• Recent oil discoveries (ExxonMobil made its first major discovery in 2015) are now feeding into sharp increases in crude production - a trend which will continue over the coming quarters. Fitch’s forecasts are consistent with the economy of Guyana being 337.4% larger than its pre-Covid-19 level by the end of 2024.
• Given this, the oil boom will continue to manifest itself in rapid export and investment growth; while providing policymakers with room to ramp up government spending.
• Fitch’s view is that export volumes will increase by 40.5% in 2023 and a further 39.0% in the following year, resulting in net exports contributing 16.7 and 17.5 percentage points (pp) to headline growth in 2023 and 2024 respectively.
• Furthermore, the most recent GDP data (for 2022) show that the share of mining output (which almost entirely consists of oil) to GDP has risen from 15.0% in 2019 to 61.6% in 2022 on the back of a series of successful offshore explorations. In the coming quarters, this trend will continue with other large projects set to be undertaken by the ExxonMobil-led consortium.
• However, the risks to Fitch’s near-term view are tilted to the downside. A slump in global oil prices has the potential to trigger a pullback of foreign investment channelled into oil exploration and production.

(Source: Fitch Solutions)