Coface, a world-renowned leader in trade credit finance, noted in its most recent country analysis for Guyana, that the country’s oil sector boom is projected to drive a period of uninterrupted, strong growth.
In its report seen by Guyana Standard, Coface which is based in France said business activity for the fledgling oil producer will continue to perform brilliantly in 2023, with growth expected to come in well above that of neighbouring countries, thanks to rising production in the oil sector.
It said the significant oil resource discoveries in the Stabroek block (operated by the ExxonMobil, Hess and CNOOC consortium) have enabled the country to become the third-largest commercially recoverable oil reserve in Latin America and the Caribbean.
With three FPSOs set to be in operation in this year, it noted that the economy will benefit from bumper profits as oil prices remain high.
In addition, it noted that non-oil GDP, which had contracted by more than 7% in 2020 due to the Covid-19 crisis, experienced strong recovery, which continued in 2022 and is expected to be around 5% in 2023.
It said the increase in non-oil GDP is driven by the robustness of the mining, construction and services sectors, notably thanks to the positive spillover effects of the oil sector and the resulting infrastructure investment needs.
Additionally, Coface said, “Inflation will remain rather elevated due to high international commodity prices (food and fuel, in particular) and to the growing social and public investment expenditure made possible by abundant oil tax revenues.”
Be that as it may, Coface said its impact on domestic demand and the risk of second-round effects will remain limited as the authorities have already adopted measures to alleviate its impact on household purchasing power.
It noted that the downside risks remain the volatility of world oil prices and the possibility of a slowdown in global demand. Conversely, Coface said higher oil prices and new oil discoveries in Guyana’s Stabroek Block, as well as other offshore concessions, could further improve the outlook for 2023 and 2024.
Since taking office, the Ali-led administration has been forging ahead with an aggressive agenda to produce Guyana’s oil while simultaneously improving an expensive and inefficient power grid. Notably, construction of a gas-fired power plant fed by a 220-kilometre pipeline with offshore fields is scheduled to begin in 2024.
