The Inter-American Development Bank (IDB) sees potential for the Caribbean to benefit from the oil boom of its new “growth pole” — Guyana.
The Bank said in its latest Caribbean Economics Quarterly Bulletin that Caribbean economies are experiencing continued growth into 2024 as the severe economic and social stress of the COVID-19 pandemic has receded. Singling out Guyana, the Bank said, “the extraordinarily high oil-fueled growth of Guyana in the short to medium term is nowhere close to losing steam.”
The country is expected to see double-digit economic growth almost every year this decade. According to World Bank projections, Guyana’s growth in 2024 alone is expected almost to double the overall average for the Caribbean region.
The IDB said, “greater regional economic integration could take advantage of this new impetus for regional growth.”
CARICOM has been slow to implement its plan for a ‘single market and economy’. The region most recently missed a 2024 first-quarter timeline to deliver free movement of CARICOM nationals throughout the territories.
Guyana’s most tangible attempt to share its wealth with the region is through its spearheading of the ‘25 by 2025’ food security initiative. Launched in 2022, the CARICOM initiative targets a reduction of the regional food import bill by 25% by 2025. The threat of food insecurity had been exacerbated by the COVID-19 pandemic and Russia’s war in Ukraine.
As one of the few Caribbean countries producing more than 50% of their own food, Guyana has invested heavily in agriculture to help feed the region. In 2023, the agriculture sector, which accounted for 24% of Guyana’s non-oil economy, grew by 7% and is projected to grow by 10.4% in 2024, the IDB reported.
President Irfaan Ali appealed to CARICOM to remove non-tariff barriers to trade, which are seen as a hindrance to ‘25 by 2025’. Most recently, tensions rose when Trinidad and Tobago denied dairy products from Guyana in May.
More on Guyana’s growth…
After world-leading growth of 62% in 2022, Guyana grew 33% in 2023 and is expected to grow 34.3% in 2023. This is primarily driven by growth in oil production. Since first oil in 2019, Guyana’s output has grown more than 600,000 barrels per day (b/d) and is expected to hit 1.3 million b/d by 2027.
According to the IDB, the non-oil economy has benefited from a significant positive spillover from greater public expenditure on infrastructure projects and private sector activity, which experienced double-digit GDP growth in 2022 and 2023, with similar projections for 2024. The non-oil economy grew by 11.5% in 2022 and 11.7% in 2023, and is expected to grow by 11.9% in 2024. In 2023, large sectors with high growth rates included construction, manufacturing, and services, which grew by 26.8%, 25%, and 10.3%, respectively. Those sectors made up almost 60% of the non-oil economy, the IDB reported.
It noted that this context has resulted in strengthening public finances and declining debt-to-GDP ratios. While the Bank outlined a positive outlook for Guyana, it flagged climate challenges like floods and rising sea levels which can disrupt economic activities, damage infrastructure and affect livelihoods. The Bank also said the rate of government spending through multiple infrastructure projects could put pressure on overall price levels.
There remains much room for improvement of living standards for most Guyanese. Concerns about the cost of living and the distribution of wealth continue to pervade local public discourse. Government has said it continues to take measures to alleviate rising consumer costs and intends to ensure the benefits of massive oil revenues reach the masses.
