International ratings agency Fitch expects Guyana’s oil-driven economic boom will continue into 2024, with a projected growth rate of 23.5 per cent.

Gross Domestic Product (GDP) growth for the current year is slated to end 2023 on a high of 29.5 per cent, coming in on the back of the 20.1 per cent and 62.4 per cent growth rates recorded in 2021 and 2022, respectively.

Economic data show that these forecasts are consistent with the economy of Guyana being 337.4 per cent larger than its pre-COVID-19 level by the end of 2024. The surge in oil production will manifest itself in a continued surge in net exports.

Export volumes are expected to increase by 40.5 per cent in 2023 and a further 39.0 per cent in the following year, resulting in net exports contributing 16.7 per cent and 17.5 per cent to headline growth in 2023 and 2024, respectively. The most recent GDP data for 2022 show that the share of mining output, which almost entirely consists of oil to GDP, has risen from 15.0 per cent in 2019 to 61.6 per cent in 2022.

This comes on the back of a series of successful offshore explorations.

Large projects and crude production

In the coming quarters, this trend will continue with other large projects set to be undertaken by the ExxonMobil-led consortium. With this in mind, crude production is expected to increase by 41.0 per cent and 50.0 per cent in 2023 and 2024, respectively.

The jump in hydrocarbon output will feed through to stronger domestic demand. While real private consumption growth is expected to slow a little from the estimated 8.5 per cent increase recorded in 2022, it will still come in at a fairly rapid 7.5 per cent in 2023 and 6.0 per cent in 2024 – contributing 3.2 per cent and 2.1 per cent, respectively, to real GDP growth in these years.

The robust performance of consumer spending will be driven partly by an improvement in labour market conditions, as the expanding oil projects continue to increase demand for domestic workers. In the near term, households will also benefit from contained inflation.

The data show that the deluge of capital inflows related to the oil production boom means that there is little-to-no downward pressure on the Guyanese dollar. Against this backdrop, the latest inflation reading for August 2023 came in at just 0.3 per cent year-over-year, which is a drop from a recent peak of 7.2 per cent in December 2022 and the lowest rate in almost eight years.

Fitch’s projection is for inflation to average just 0.3 per cent year-over-year for 2023 as a whole, and then 2.6 per cent year-over-year in the following year.