Guyana on track to see 115% GDP growth but repercussions of corruption, political discord loom large

Guyana on track to see 115% GDP growth but repercussions of corruption, political discord loom large – CNBC Report

Sep 28, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Two international energy consultants agree that while Guyana is poised for massive growth in 2023 and years to come, attaining this level of success will be hinged on how well its leaders manage corruption risks and the repercussions of political discord. Specifically, Andrew Trahan, Head of Latin America at a Fitch Solutions research unit and Valerie Marcel, an Associate Fellow at UK think-tank Chatham House shared similar perspectives in a news report published by CNBC.

Andrew Trahan of Fitch Solutions

Trahan is quoted saying that Guyana will see explosive growth this year, a position also shared by the Guyana Government as well as the International Monetary Fund (IMF). The consensus is that Guyana will peak at about 28 percent growth in Gross Domestic Product (GDP) for 2023. Trahan shared in the interview that he expects real GDP in Guyana to rise about 115% in the next five years. Trahan also forecasts that the country will be the fastest-growing economy in the world in 2023 again, and expects it to retain the title for at least the next two years.

Dr. Valerie Marcel, an Associate Fellow at think tank Chatham House, told CNBC via email that Guyana’s positive growth trajectory will continue. She noted however that this will hinge on the country’s political stability and high oil prices.

“Over time, oil prices will be quite volatile and eventually stay low. That’s why it’s extremely important for Guyana to diversify its economy,” said Marcel. The industry expert also warned that Guyana faces risks notably in corruption and Dutch disease, an economic term referring to the negative repercussions that arise from rapid development as a result of newfound resources, which paradoxically harms the broader economy.

Valerie Marcel, Associate Fellow at Chatham House

Trahan shared in those cautionary sentiments, citing political risks as another factor to be watched closely. “Guyana is a country with a history of deep divisions between its Indo- and Afro-Guyanese populations, and it struggles with corruption and organized crime,” said Trahan. The influx of oil profits could exacerbate the divisions, he said.

Guyana is currently considered the world’s fastest growing economy on a per capita basis due to the accelerated oil and gas activities in the Stabroek Block located 120 miles away from the country’s coastline. The concession is operated by ExxonMobil Guyana Limited in partnership with Hess Corporation and CNOOC Petroleum Guyana Limited. Thus far, the companies have five sanctioned projects, two of which are already producing about 400,000 barrels of oil per day. Before the end of the year, Guyana is expected to see another oil project brought online and increasing the daily output to over 600,000 barrels of oil per day.

Over 11 billion barrels have been unlocked in the Stabroek Block. Exxon and partners have been granted permission by the country’s environmental regulator to drill 35 wells in hopes of finding more multi-billion barrel discoveries.

(See link for full CNBC Report: https://www.cnbc.com/2023/09/27/worlds-fastest-growing-economy-guyana-could-grow-100percent-in-5-years.html?__source=androidappshare)