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COVID-19 and the Economic Outlook… IMF projects 52.8% growth for Guyana in 2020
By Kiana Wilburg
As governments across the world continue to grapple with the significant economic damage done by the COVID-19 pandemic, while bracing for negative growth, the latest projections by the International Monetary Fund (IMF) show that Guyana is expected to be the only country in the Latin America and Caribbean Region to have a positive outlook for 2020.
Last year, the IMF had predicted that Guyana’s Gross Domestic Product (GDP) would grow by 86 percent. But due to the effects of the oil price war between Saudi Arabia and Russia as well as COVID-19’s effects on the overall global demand for oil, the IMF has revised its projection to 52.8 %. Guyana’s neighbours in the region on the other hand, are not so fortunate to still emerge with positive growth.
Based on the IMF’s projections, Trinidad and Tobago for example will see negative growth which is pegged at -4.5%. Following this, the country’s former Minister of Energy, Kevin Ramnarine had taken to his Linked In profile to comment on the troubling forecast. He said, “The just released International Monetary Fund’s World Economic Outlook has forecast -4.5% growth for T&T in 2020. T&T is facing the worst economic crisis since 1986 to 1989. T&T’s recovery is likely to be dampened by oil and gas prices staying low for a long time. #thegreatlockdown.”
Other nations such as Suriname, Venezuela and Brazil are projected by the IMF to see negative growth rates of -4.9, -15.0, and -5.3 respectively. (The chart attached to this article shows some of the other countries in the Latin America and Caribbean Region that will see negative growth.)
The IMF’s forecast seems to be in line with the World Bank’s. According to this financial institution, Guyana is expected to see a GDP growth of 51.7 percent for 2020.
In its latest reported titled, “The Economy in the time of COVID-19”, the Bank said, “…Oil production is projected to boost GDP growth to unprecedented levels in 2020.” While this could transform Guyana, the Bank was keen to note that there are risks, “as illustrated by a still incomplete election outcome, and compounded by falling oil prices and the Covid-19 epidemic.” The World Bank also noted that weak public service delivery and monitoring systems constrain the development of policies to reduce poverty and protect the vulnerable.
GLOBAL CONTRACTION
As a result of the pandemic, the IMF said that the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crises. The Fund said that in a baseline scenario–which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support.
Further to this, the IMF said that the risks for even more severe outcomes, however, are substantial. Expounding in this regard, the Fund said that effective policies are essential to forestall the possibility of worse outcomes, while noting that the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.
The IMF said, “Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.”
Internationally, the Fund asserted that strong multilateral cooperation is essential to overcome the effects of the pandemic, including helping financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.
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