Real economic growth poised to surpass target, measures taken to withstand oil price drop

Last Updated on Tuesday, 4 November 2025, 20:06 by Writer

Overall growth in Guyana’s production of tangible goods and services this year is now set to surpass its target by 4.6 percent to reach 15.2 percent, according to the finance ministry’s mid-year report.

The report, which was tabled in the National Assembly on Monday also states that non-oil growth is projected at 13.9 percent, up from the initial projection of 13.8 percent, making 2025 the fifth consecutive year of expansion in both the overall and non-oil economy.

The 2025 National Budget had forecast an overall real gross domestic product (GDP) of 10.6 percent.

Reflecting on the economy’s performance over the past six months, the finance ministry said the real economy is estimated to have expanded by 7.5 percent, reflecting continued strong growth in the oil and gas industry, more so considering that the fourth floating production storage offloading (FPSO) vessel came online in the second half of the year. The mid-year report says the oil and gas industry is estimated to have expanded by 5.5 percent in the first half of 2025.

“As we move into the second half of the year, prospects for 2025 remain strongly positive, with a focus on sustaining growth in the non-oil economy while the oil and gas sector continues to ramp up,” the report also states.

Non-oil export earnings increased by 12.5 percent to US$919.7 million, mainly supported by gold and bauxite expanding by US$147.5 million and US$31.1 million, respectively. These gains largely reflect soaring gold prices and higher volumes for bauxite.

The report notes that gold prices grew by 39.6 percent when compared with the first half of last year, to average US$3,077.9 per troy ounce in the first half of this year, surpassing the US$3,000 mark for the first time in history in mid-March.

The gold mining subsector grew by an estimated 10.9 percent in the first half of this year, with higher declarations from the single large producer and the small- and medium-scale miners.

At the end of June, gold declarations totalled 208,757 troy ounces, compared with 188,160 troy ounces in the first half of 2024.

In the first half of the year, the bauxite mining subsector is estimated to have grown by 133.1 percent, with a total production of 1.7 million tonnes. The government added that the sector is now projected to grow by 65.9 percent, with an overall production target of nearly 4.3 million tonnes for 2025. The other mining and quarrying subsector continues to be driven by the surge in construction activity across the country. It is estimated that the subsector – which includes sand, stone, diamonds and manganese – expanded by 24.2 percent in the first half of the year. Sand and stone declarations are estimated to have grown by 8.1 percent and 95.5 percent, respectively, despite some challenges faced by sand producers which have since been overcome.

The manufacturing sector is estimated to have expanded by 26.8 percent in the first half of the year, driven by growth across all subcategories – other manufacturing, rice and sugar. It is estimated that the other manufacturing subsector grew by 30.8 percent in the first half of the year, largely attributed to improved output of non-metallic products, plastics, and pharmaceuticals. At the same time, rice manufacturing and sugar manufacturing expanded by 12.4 percent and 136.7 percent, respectively. The manufacturing sector is now projected to grow by 14.9 percent this year.

In the first half of the year, the services sector is estimated to have recorded growth of 6.6 percent, primarily supported by growth in wholesale and retail trade and repairs (8.6 percent), administrative and support services (6 percent), financial and insurance activities (6.6 percent), professional, scientific and technical services (41.6 percent), and information and communication (12.3 percent).

The expansion in administrative and support services was mainly driven by higher demand for security services. Further, growth in professional, scientific and technical services primarily reflects continued expansion in construction activities and support services for the oil and gas economy that demand engineering, architectural, legal, and accounting services.

The services sector is now projected to grow by 8.6 percent this year.

The construction sector is estimated to have expanded by 29.9 percent in the first half of the year, supported by the government’s expanded Public Sector Investment Programme (PSIP), along with robust private sector investments across several sectors. With large-scale infrastructural projects progressing, full-year growth for the sector is now projected at 26.2 percent.

Oil prices

With crude oil prices anticipated to come in 15.7 percent below the 2024 level, to average US$68 per barrel in 2025, lower than the US$71.9 per barrel projected at the time of preparing Budget 2025, the finance ministry’s mid-year report points to efforts that are being made to compensate for the oil price slump. “Government has focused on ensuring that the non-oil economy has the capacity to service obligations in the event of a decline in oil prices,” the report says in dealing with diversifying domestic resource mobilisation. That approach, the ministry said, remained a top priority for the government, despite the importance of revenue from oil and gas. The government said traditional, non-oil revenue and borrowing still finance significant portions of its spending.

The finance ministry says since 2020, none of the national budgets has imposed any new taxes on the Guyanese people. Instead, the government says it has reduced tax rates across multiple categories, and has taken a number of key steps to broaden the tax base and reduce leakages in the system, resulting in higher current revenue and internal tax collections. Central Government revenue has grown from GY$227.7 billion in 2020 to GY$784.6 billion in 2024. Within this, tax revenue collections have increased from $218.3 billion in 2020 to $420.2 billion last year, “supported by our thriving non-oil economy.”

At the same time, the finance ministry says the Central Government revenue base has been broadened with Natural Resource Fund (NRF) withdrawals and the monetisation of Guyana’s forests through carbon credits. With respect to carbon credits, Guyana signed a US$750 million agreement with Hess for ART-TREES credits and began receiving payments in 2023.