The IMF thinks this small South American country will see economic growth of 86% next year
- Guyana, a country of about 780,000 which shares a border with Brazil, Suriname and Venezuela in the northeast of South America, will see economic growth of 86% in 2020, according to the IMF.
- The nation is poised to start oil production next month — a prospect which analysts believe will be transformative for economic prosperity in South America’s only English-speaking country.
- It is going to be “very difficult for Guyana not to be completely subsumed by the oil sector,” Valerie Marcel, an associate fellow at think tank Chatham House, told CNBC via telephone on Monday.
The International Monetary Fund (IMF) believes one of South America’s smallest countries is likely to see a dramatic upswing in economic growth next year.
Guyana, a country of about 780,000 which shares a border with Brazil, Suriname and Venezuela in the northeast of South America, will see economic growth of 86% in 2020, according to the IMF. That’s up from 4.4% in 2019.
Such an explosive expansion of annualized real GDP (gross domestic product) would likely see Guyana register the fastest economic growth in the world next year. To be sure, Guyana’s projected economic expansion would be 40 times that of what is expected from the U.S. — the world’s largest economy.
“The reason the IMF is projecting that is because Guyana has the highest amount of oil for each individual person of any country in the world,” Natalia Davies Hidalgo, a freelance Latin American analyst, told CNBC via telephone on Monday.
In comparison to OPEC kingpin Saudi Arabia, which has approximately 1,900 barrels of offshore reserves per person, Guyana has 3,900 barrels, Hidalgo said.
“And it could have more, as production hasn’t even started yet and new discoveries are still being made.
‘Ambitious’
Guyana is poised to start oil production next month — a prospect which analysts believe will be transformative for economic prosperity in South America’s only English-speaking country.
However, Hidalgo described the IMF’s projection as “ambitious,” noting it was probably the highest annual economic forecast the global crisis lender had ever predicted.
That’s because the country’s government is technically interim until elections are held in March, meaning it is currently unable to pass a budget for 2020.
In addition to a lack of regulatory legislation in the country, Hidalgo said the likelihood of project delays and non-payment in the infrastructure sector could also threaten the IMF’s forecast.
In comparison to the IMF’s prediction that Guyana will register economic growth of 86% next year, IHS Markit believes political instability in the country makes it much more likely the country’s economy will expand by about 30%.
