Oil continues to drive Guyana’s economy; non-oil economy records “strong continued growth”

Last Updated on Monday, 2 September 2024, 9:03 by Writer

The oil sector is continuing to drive Guyana’s double digit real gross domestic product (GDP) for a fourth straight year, with the non-oil sector registering impressive performance of 49.7%, according to the 2024 mid-year economic report.

“Growth continues to be driven by expansion in the oil and gas industry, along with strong continued growth in our non-oil sectors,” Finance Minister Dr Ashni Singh said in the half-year report.

The mid-year report states that the South American nation’s real GDP for the first six months of this year was 49.7% and it is projected to end the year at 42.3%, up from this year’s National Budget projection of 34.3%.

President Irfaan Ali said the petroleum sector accounted for 67.1% of the half-year growth with 113.5 million barrels of oil having been produced from January to June, compared with 68.7 million barrels in the same period of 2023.

Ali said the oil sector is now projected to grow by 56.4% for the entire year, up from 44.7% projected at the time of preparing Budget 2024.

The President also said non-oil growth was 12.6% during the first six months of 2024 and that is now projected to be 11.8% for the entire year. “Looking ahead, the overall outlook for 2024 remains positive, as strong performance in other sectors enable us to largely maintain our non-oil growth expectation… Once realised, this will represent the fourth successive year of expansion in the non-oil economy, following the contraction in 2020,” the report states.

Total export earnings grew by 68.7% to US$10,221.9 million, “largely on account of higher earnings from crude oil exports”.

The report itself details that following the Prosperity floating production storage and offloading vessel (FPSO) startup in November 2023 – the third FPSO – daily production in the Stabroek Block averaged 624,000 barrels per day (bpd) in the first half of this year, compared
with approximately 380,000 bpd in the first half of last year. Supported largely by higher-than projected production rates on the Prosperity FPSO, crude oil production is now projected at approximately 228 million barrels this year.

According to the document, which will be tabled in the National Assembly in October at the end of the annual two-month parliamentary recess, prices for Brent crude averaged US$84 per barrel in the first half of 2024, 5.2% higher when compared with the first half of last year. “The increase is attributed to intensified conflicts in the Middle East combined with production cuts from key producing countries. Higher prices have also been supported by depletion of U.S. inventories, along with the International Energy Agency adjusting its forecast of a considerable oil surplus this year to a slight deficit,” the report states.

The President said import payments declined “substantially” because of reduced imports in capital goods as no new FPSO vessel was imported.

Non-oil export earnings increased by 23.4%.

Ali said due to a prolonged drought, cane sugar output slumped by 60%, but there was likely to be “an enormous bounce back” with favourable weather and assistance from 12 Cuban and seven Indian managerial experts. There was a 20% decline in bauxite production, and gold by 10.3% due to drought. However, gold exports yielded US$12.2 million.

Other half-year growth figures are: forestry, 13.2%; fisheries, 27.7%; bauxite, 41.3%; other mining – sand, stone, diamond, manganese -45.5%; manufacturing, 27.5%; construction, 43.5%, and services sector, 7.3%.

In terms of balance of payments, in the first half of this year, the current account recorded a surplus of US$3,199.9 million, while the capital account registered a deficit of US$3,395.4 million. As a result, the overall balance of payments recorded a deficit of US$184.6 million at the end of the first half of 2024, the report states.