IMF Forecasts Strong Economic Growth for Guyana Amidst Oil Boom

The IMF forecasts significant growth in Guyana, with a projected 10¼ percent GDP increase in 2025. Positive trends are driven by the oil sector and strengthening non-oil economy. While inflation may rise, the budget deficit is expected to narrow. The medium-term outlook remains favorable with an average growth of 14 percent over five years, emphasizing the need for macroeconomic stability and social transfers.

The International Monetary Fund (IMF) has projected robust growth for Guyana, attributed to developments in both the oil and non-oil sectors. According to the IMF’s preliminary report following their Article IV Mission, “Guyana’s economic transformation is advancing at a strong pace.” This transformation is significantly driven by the burgeoning oil sector and improvements across various non-oil sectors, particularly construction and services.

The IMF estimates that Guyana’s Gross Domestic Product (GDP) will witness an approximate growth of 10¼ percent, alongside a 13 percent increase in the non-oil sector in 2025. The country recorded the highest global GDP growth rate, averaging 47 percent from 2022 to 2024, primarily due to rapidly advancing oil production and substantial public infrastructure investment.

Forecasts indicate that inflation may rise to around 4 percent by the end of 2025, increasing from nearly 3 percent at the end of 2024. Moreover, the government’s budget deficit is projected to decrease to about 5 percent of GDP by 2025, as heightened oil revenues compensate for anticipated spending increases. The current account surplus of 24½ percent of GDP in 2024 is expected to reduce to about 9 percent in 2025 due to importing the fourth oil Floating Production Storage and Offloading (FPSO) vessel.

The medium-term economic outlook remains optimistic, with the IMF projecting an average growth of 14 percent annually over the next five years. Growth in the non-oil GDP is expected to be around 6¾ percent per year. However, risks such as commodity price fluctuations and overheating pressures may challenge this growth, possibly leading to increased inflation.

The IMF has advised the Guyanese government to maintain macroeconomic stability and fiscal sustainability while promoting inclusive growth. Recent social transfer policies have improved disposable income and reduced poverty rates. The IMF highlighted the importance of ongoing monitoring to prevent overheating and to support balanced economic expansion, alongside recommending targeted social transfers to further support inclusive growth and achieve sustainable development goals regarding poverty.

The mission involved discussions with key government officials, including Vice President Bharrat Jagdeo and Finance Minister Dr. Ashni Singh, alongside other stakeholders from trade unions, the private sector, and commercial banks.

The IMF’s report demonstrates Guyana’s positive economic trajectory, driven by significant advancements in the oil sector and steady growth in non-oil industries. While the nation faces some risks, the overall outlook remains encouraging, provided that appropriate fiscal and social policies are developed and implemented. Continued monitoring is essential to maintain macroeconomic stability and support inclusive growth, helping to further reduce poverty in Guyana.

Original Source: newssourcegy.com