IMF Forecasts Strong Economic Growth for Guyana Amid Oil and Non-Oil Sector Advances

The IMF reports strong economic growth in Guyana driven by the oil and gas sector and solid performance in non-oil industries. Projected GDP growth for 2025 is around 10¼%, with non-oil sectors growing by 13%. Inflation may rise to 4%, but the budget deficit is expected to shrink to below 5%. The medium-term outlook is positive, with average growth at 14% annually over the next five years, yet careful monitoring of economic risks is essential.

The International Monetary Fund (IMF) noted significant strides in Guyana’s economic transformation, as reported during the conclusion of its Article IV Mission for 2025. This report cites robust growth driven by both the rapidly expanding oil and gas sector and advancements in non-oil industries. Overall, Guyana’s real GDP growth rate is anticipated to reach a historic average of 47% between 2022 and 2024.

The non-oil economy showcases solid performance across various sectors, notably in construction and services. Forecasts predict that the national Gross Domestic Product (GDP) will increase by approximately 10¼% in 2025, with the non-oil sector expected to grow by 13%. Inflation, however, could rise to around 4% by the end of 2025, compared to close to 3% in late 2024.

The IMF anticipates a narrowing of the budget deficit from 7.3% of GDP to just below 5% by 2025, fueled by rising oil revenues outpacing anticipated expenditure increases. Furthermore, while the current account surplus of 24½% in GDP for 2024 is projected to decrease to about 9% in 2025, this is largely due to the importation of the fourth oil Floating Production, Storage and Offloading (FPSO) vessel.

The medium-term outlook for Guyana’s economy appears promising, with an expected average annual growth of 14% over the next five years. This growth will be significantly supported by increased oil production alongside a rising contribution from the non-oil sector, which is projected to expand by approximately 6¾% annually.

While potential risks, such as commodity price volatility, inflation spurts, and climate shocks, could hinder economic stability, the IMF stresses the importance of maintaining macroeconomic stability and ensuring fiscal sustainability. The IMF commended Guyana for its recent social transfer policies, which have effectively increased disposable income and reduced poverty levels.

While there are no immediate signs of economic overheating, close monitoring of the macroeconomic landscape is advised to preempt potential imbalances. Additional targeted social transfers could help support inclusive growth in alignment with the sustainable development goal of eliminating poverty. The IMF’s findings were based on consultations with key government officials and stakeholders in Guyana from February 2024 until early March 2025.

In conclusion, the IMF’s report indicates that Guyana is experiencing remarkable economic growth driven primarily by its oil and gas sector, with substantial contributions from non-oil sectors. Projections for future growth remain highly favorable, but risks such as inflation and external economic factors prompt the need for careful policy management. Continued progress on fiscal and social initiatives is essential to sustain this growth and work towards alleviating poverty.

Original Source: newssourcegy.com