Guyana's Oil-Driven Boom To Continue Despite Venezuela Tensions

• Fitch Solutions expects Guyana's oil-driven economic boom to continue over the coming years as the hydrocarbons sector continues to expand rapidly. 
• Against this background, Fitch has raised its forecast for real GDP growth in 2024 from 23.5% to 28.6% due to an improving near-term outlook for oil output, following the swift ramp-up of production at the country's third offshore field.
• Preliminary data from the Bank of Guyana show growth reached 33.0% in 2023, beating Fitch’s forecast of 29.5%, driven by increased oil investment and output as the country's third production vessel, the Prosperity, commenced operations at the Payara field in November 2023. 
• Against this backdrop, Fitch’s Oil & Gas team expects Guyana to increase its average crude oil output by 49.6% y-o-y in 2024, reaching 584,000 b/d (barrels per day). Oil production is forecast to more than double over the coming years to reach an average of 1,187,000 b/d in 2028 as the ExxonMobil-led consortium commences production at three more fields -Yellowtail, Urau, and Whiptail.
• While headline growth will be fuelled primarily by exports and investment in the oil and gas sector, the government will also continue to ramp up spending to stimulate growth in the non-oil economy.
• The risks to Fitch’s growth outlook hinge on development in the oil and gas sector, with key downside threats being a disruption to oil production or a pullback in foreign investment in response to any slump in global oil prices. Fitch also notes moderate risks associated with the Venezuela-Guyana border dispute, which would rise sharply if Venezuela adopts a more hostile approach ahead of presidential elections due in the second half of 2024. That being said, Fitch’s core view remains that an invasion and military conflict is unlikely. 

(Source: Fitch Solutions)