In an article republished on May 29, The Economist described Guyana as “about to become one of the most extreme cases” of the resource curse, referencing the rapid influx of oil revenue. But is that truly the case on the ground?
The resource curse, or Dutch disease, occurs when an economy becomes overly dependent on a single commodity, usually oil or minerals. This can lead to inflation, neglect of other sectors, an overvalued currency, and eventually economic instability when commodity prices fall.
Guyana’s economy has grown significantly since oil production began in 2019. According to the International Monetary Fund (IMF), real GDP grew by 62.3% in 2022, making it the highest in the world. In 2023, growth was projected at 38.4%, and in 2024, the IMF forecasted 26.6%. For 2025, growth is expected to moderate to 10.3%.
Despite this rapid growth, the IMF has not concluded that Guyana is experiencing the resource curse. In fact, in its December 2023 Article IV Consultation Report, the IMF said there were “no signs of inflationary pressures or economic overheating” despite the oil windfall.
The IMF did warn that the economy could become overheated, with inflation and an appreciated real exchange rate. But this has not happened. Inflation has remained low.
Economist Richard Rambarran addressed these concerns at the 2025 Offshore Technology Conference. He explained, “Overheating refers to inflation rising too quickly without enough productive outlets in the economy… But when you look at Guyana’s inflation relative to global and regional levels, we’re well below both.”
He attributed this to “deliberate fiscal policy” and Guyana’s Sovereign Wealth Fund, known locally as the Natural Resource Fund. “Revenue from oil doesn’t go directly into the economy. It first enters the Fund and is then released into the Treasury in a staggered, controlled manner,” Rambarran said. Over the last 16 quarters, inflation has stayed below 4%, dipping to as low as 1.5%.
Another hallmark of Dutch disease is the collapse or neglect of non-oil sectors. However, IMF data tells a different story. Oil GDP’s share of the economy is projected to decline for the first time in 2025, from 65.13% in 2024 to 62.62% in 2025. Meanwhile, non-oil GDP will rise from US$8.60 billion in 2024 to US$9.64 billion in 2025. That is a nearly 32% increase in non-oil activity over two years.
The IMF noted: “Positive spillovers from the oil sector and improvements in infrastructure, productivity, and resilience are expected to boost the real non-oil GDP growth to an average of 6¾ percent over the medium term, about 3 percentage points higher than the pre-oil decade average.”
This trend points to an expanding economy, not one stalling under the weight of oil dependency.
The government said it prioritized spending on capital programmes, not consumption. Vice President Bharrat Jagdeo addressed early fears of overheating in 2022 when the entire GY$126 billion from the Natural Resource Fund was allocated to the national budget.
He said, “That is a fair question because it is a major concern about our capacity to implement a budget of this nature on the capital side and it could potentially drive prices up from overheating the economy. But key to all of this is management throughout it. And that is why first of all, we structured the budget the way we did. The capital programmes are where the bulk of the money has gone to.”
Economist Rambarran echoed this strategy, noting that spending is going to sectors like agriculture, manufacturing, and services. “You’re not just feeding the local market, you’re building value chains, supporting small and medium enterprises, and expanding export potential,” he explained.
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The numbers show that while Guyana’s economy is surging thanks to oil, it is not currently exhibiting the classic symptoms of Dutch disease. The IMF has rated Guyana’s fundamentals as strong. Inflation is low. Non-oil sectors are expanding. Oil’s share in the economy is declining slightly. And investments are being made in long-term growth, not short-term gains.
“Guyana is not immune to the risks of overheating,” Rambarran cautioned, “but I think we are uniquely positioned to manage it well, particularly with the frameworks and strategies we already have in place.”
So while Guyana faces real risks, the evidence shows it has not fallen into the trap of the resource curse, at least, not yet.
