…with GDP poised at 25.2% for 2023

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Driven mainly by its burgeoning oil and gas sector, Guyana is pegged to once again lead the Latin America and Caribbean (LAC) region with the fastest growth rate.
This is according to a new World Bank report – “The Promise of Integration, Opportunities in a Changing Global Economy.
Zeroing in on the Growth Outlook for the LAC region, the report highlighted that Guyana was slated to record 25.2 per cent growth in its Gross Domestic Product (GDP) this year. The country is the only one with double-digit growth for 2023, while St Vincent and the Grenadines came in second with a projected six per cent growth rate.
Guyana’s economic outlook for this year followed its consistency of being the fastest-growing country in the LAC region since 2020. This trend is expected to continue over the coming years with estimated growth of 21.2 per cent in 2024 and 28.2 per cent in 2025.
Chief Economist for Latin America and the Caribbean at the World Bank, William Maloney, who produced the report, confirmed that the country’s nascent oil and gas sector was responsible for its high growth rates.
“You don’t get 25 per cent rate of growth without having something like discovering oil. Clearly, the oil and gas sector is driving those high rates of growth,” he stated during a virtual press conference on Wednesday.
Guyana started producing oil in December 2019 and to date, it has earned billions of dollars in revenues from oil sales and royalties.
In fact, the country is expected to earn another US$1.6 billion this year alone. Already, five deposits have been made into the Natural Resource Fund (NRF) between January 1 to March 31, 2023.
According to the Natural Resources Ministry earlier this week, a total of US$377,140,826.94 in profit oil and royalty payments was received so far this year.
The Guyana Government has implemented a series of measures, including strengthening legislation and parliamentary oversight, to ensure transparency and accountability in the use of oil revenues.
In fact, the importance of this was underscored by the World Bank official.
“The big challenge would be to develop an institutional structure that ensures those resources go where they have to go, that they are used constructively for laying the foundations for new industries to diversify the economy, to address long-standing social needs and just to have a governance framework that ensures these resources are used well,” Maloney posited.
Currently, the World Bank is working with local stakeholders in Guyana on many of these fronts.

Regional outlook
Nevertheless, “The Promise of Integration, Opportunities in a Changing Global Economy” report further estimated that regional GDP would grow by 1.4 per cent in 2023, a lower-than-expected rate. Rates of 2.4 per cent are expected for 2024 and 2025, too low to also make significant progress in poverty reduction.
According to the report, Latin America and the Caribbean economies have proven relatively resilient in the wake of increasing debt stress, inflation and rising global uncertainty. But new headwinds in the form of lower commodity prices, higher interest rates in developed countries, and China’s unsteady recovery could potentially turn the region’s prospects bleak.
In order to boost much-needed growth, countries should preserve their hard-won resilience and seize the unique opportunities global economic trends offer in nearshoring – moving production closer to home markets, and the green industry, the report states.
World Bank Vice President for Latin America and the Caribbean, Carlos Felipe Jaramillo said: “The region has largely recovered from the pandemic crisis, but unfortunately is back to the low growth levels of the previous decade.”
“Countries need to urgently accelerate inclusive growth, so that everyone benefits from development, and this will require maintaining macroeconomic stability and taking advantage of the opportunities trade integration offers today,” he added.
After recovering from the pandemic, the region has managed with relative success the multiple crises caused by the Russian war in Ukraine and the uncertainties surrounding the global economy. Both poverty and employment are mostly back to pre-pandemic levels, while average inflation, excluding Argentina, is expected to decline to 5.0 per cent in 2023 after reaching 7.9 per cent in 2022.
According to the report, the region´s overall resilience is the result of hard-won progress in macroeconomic management over the past two decades. Preserving this progress will be paramount.
However, on average, fiscal imbalances remain high, expected at 2.7 per cent of GDP in 2023, further eroding the already-tight fiscal space, and debt levels are estimated to reach 64.7 per cent of GDP this year, slightly down from 66.3 per cent in 2022. Furthermore, the recent bank failures in the US and Europe have introduced additional uncertainty. Its resonance in LAC´s banking system and capital flows remains to be seen.
Maloney said, “The LAC region remains one of the least integrated, while trade openness and [Foreign Direct Investment] FDI flows have mostly been stagnant or decreasing over the past 20 years; countries should find ways to gain attractiveness and take advantage of the nearshoring trends.”
“In addition, leveraging the region’s extraordinary comparative advantage in sustainable energy production, commodities necessary for emerging green industries, and the region’s unique natural capital offers a new potential source of growth, but will require policies to facilitate access to global markets, capital, and technology,” he further stated.
The report also suggests a series of integration-advancing policies countries should consider for seizing these opportunities. These include long-term policies such as reducing systemic risks, boosting traditional and digital infrastructure investments, and improving human capital, as well as short-term options such as preserving macro stability, promoting customs and transport regulatory advances, and improving export and investment promotion agencies