This is the world’s fastest growing economy, and it could grow an ‘explosive’ 100%

The
world’s
fastest
growing
economy
may
be
on
track
to
grow
by
more
than
100%
by
2028,
largely
fueled
by
profits
from
its
oil
production
and
export
sector,
according
to
one
analysis.

Guyana,
a
country
in
South
America
with
a
population
of
about
800,000
people,
is
projected
to
grow
38%
by
the
end
of
the
year
—
an
“extremely
fast”
pace,
according
to
recent
GDP
forecasts
by
the

International
Monetary
Fund.

The
IMF
is
not
alone
in
its
optimism.

BMI,
a
Fitch
Solutions
research
unit,
is
also
of
the
view
that
“Guyana
will
see
explosive
growth
this
year,”
said
Andrew
Trahan,
its
head
of
Latin
America
country
risk.

He
expects
real
GDP
in
Guyana
to
rise
about
115%
in
the
next
five
years.

“The
exact
magnitude
of
the
increase
[is]
dependent
on
how
quickly
additional
oil
production
is
brought
online,”
he
added.

BMI
sees
oil
production
in
Guyana
to
jump
from
around
390,000
barrels
per
day
this
year
to
over
a
million
barrels
per
day
by
2027
as
new
offshore
fields
in
the
country’s
Stabroek
Block
are
opened
by
a
consortium
led
by


ExxonMobil.

Guyana’s
Stabroek
Block
is
a
6.6
million
acre
offshore
oil
reservoir
off
the
country’s
Atlantic
coast,
and
is
estimated
to
hold
11
billion
barrels
of
oil,

according
to
ExxonMobil.

“Guyana’s
robust
growth
has
been,
and
will
continue
to
be,
driven
by
a
rapid
expansion
of
oil
production
following
a
series
of
discoveries
in
recent
years,”
Trahan
said,
adding
that
higher
oil
production
will
bolster
Guyana’s
net
exports.

Guyana
recorded
a
GDP
growth
of
62.3%
in
2022,
the
highest
in
the
world,
according
to
the
IMF.

Besides
oil
production
ramping
up
with
a
third
oil
field
coming
on
stream,
growth
in
Guyana’s
non-oil
sector
has

also
been
boosted
by
investment
in
transportation,
housing
and
raising
human
capital.
IMF’s
report
highlighted
that
Guyana’s
agriculture,
mining
and
quarrying
sectors
are
also
performing
well.  

Trahan
forecasts
that
the
country
will
be
the
fastest
growing
economy
in
the
world
in
2023
again,
and
expects
it
to
retain
the
title
for
at
least
the
next
two
years. 

“We
see
this
strong
growth
continuing
over
the
coming
years
as
oil
production
keeps
going
up,
with
real
GDP
rising
roughly
115%
between
2022
and
2028,”
he
said.

Guyana’s
stronger
energy
exports
will
fuel
the
country’s
growth
trajectory,
as
will
the
spillover
benefits
of
strong
investment,
new
employment
opportunities
and
increase
in
government
revenues.

That
said,
the
bullish
outlook
is
not
without
risks.

Guyana
has
grown
rapidly
from
being
one
of
the
poorest
Caribbean
countries
to
an
economy
“showing
exceptional
growth,”
Valerie
Marcel,
an
associate
fellow
at
think
tank
Chatham
House,
told
CNBC
via
email.

The
positive
growth
trajectory
will
continue,
but
that
will
hinge
on
the
country’s
political
stability
and
high
oil
prices.

“Over
time,
oil
prices
will
be
quite
volatile
and
eventually
stay
low.
That’s
why
it’s
extremely
important
for
Guyana
to
diversify
its
economy,”
said
Marcel.

Like
any
country
dependent
on
oil
revenues,
Guyana
races
risks
—
notably
in
corruption
and
Dutch
disease,
she
cautioned.

Dutch
disease
is
an
economic
term
referring
to
the
negative
repercussions
that
arise
from
rapid
development
as
a
result
of
newfound
resources,
which
paradoxically
harms
the
broader
economy.

Likewise,
BMI
sees
notable
political
risks.

“Guyana
is
a
country
with
a
history
of
deep
divisions
between
its
Indo-
and
Afro-Guyanese
populations,
and
it
struggles
with
corruption
and
organized
crime,”
said
Trahan.
The
influx
of
oil
profits
could
exacerbate
the
divisions,
he
said.