Guyana the only Caribbean country with GDP growth in 2020 – the World Bank

Guyana’s GDP growth was fueled by oil production

Guyana, which started oil production in 2019, was the only Caribbean country with a positive growth in Gross Domestic Product (GDP) in 2020. This is according to a recent World Bank report that shed light on how Latin American and Caribbean economies were doing 2020.

According to the World Bank report “2021. Renewal with Growth. LAC Semiannual Report ”, Guyana did what 27 other countries in the region could not – record GDP growth, despite the global COVID-19 pandemic.

“Despite the COVID-19 crisis, Guyana’s GDP grew by more than 20 per cent in 2020, as the exploitation of very large oil discoveries began. More modestly, Paraguay’s GDP emerged almost unscathed from the crisis, although this robust economic performance was not sufficient to prevent a new wave of social unrest, ”the report said.

“For all other countries in the region, GDP growth rates were negative in 2020, in some cases dramatically so. The worst affected countries were those in the Caribbean, a sub-region whose economic activity depends crucially on tourism. Along with hospitality and personal services, tourism has been the sector most adversely affected by the COVID-19 crisis. “

In a accompanying chart, the report notes that Guyana recorded about 43.5 percent of GDP growth. The remaining countries, including Brazil, Chile, Costa Rica and Argentina, recorded negative growth.

Guyana’s GDP growth will reportedly stay in double figures. But while Guyana’s growth is good, the report notes that the country will be challenged to translate this into investments in human capital among other things.

“While oil production is driving growth, significant risks remain in managing this new wealth. Guyana will be challenged to transform its growing oil wealth into human capital, physical capital, and financial assets for broad welfare increases, ”the report states.

Economy 2020

For 2020, Guyana has seen mixed performances from the agriculture sector. While sugar production declined, rice production increased. During his February reading of the 2021 Budget, Finance Minister Dr Ashni Singh had reported that the country’s oil-free economy contracted 7.3 per cent with sectors such as fishing, mining, manufacturing, forestry and services recording a downturn.

While the agriculture, fishing and forestry sector expanded 4.1 percent, the contracted sugar grower was 3.7 percent, with production dropping to a low 88,868 tonnes. The rice growing sector grew 4.8 percent, with paddy production reaching 1,057,580 tonnes in 2020.

In terms of other crop production, despite excess rainfall in November and December, this sector is estimated to have grown by 6.6 per cent in 2020. The Finance Minister explained that the COVID-19 pandemic would have resulted in increased demand for many fruit. , especially citrus.

Meanwhile, the livestock sector is estimated to have grown in 2020, recording a 5 percent increase. This was driven by poultry, egg and beef production, which are estimated to have grown by 10.4 per cent, 34.1 per cent, and 3.4 per cent, respectively.

The fishing industry contracted 17.1 percent while the forestry sector contracted 8.1 percent. With regard to fisheries, he said the decline was largely due to fewer boats going out fishing due to lower domestic and external demand arising from the pandemic.
On forestry, the Finance Minister explained that poor performance was driven mainly by an 11.8 per cent decline in sawnwood production, reflecting the slowdown in construction activities.

Manufacturing contracted 8.6 percent, construction 6.3 percent, and services 9.4 percent. Meanwhile, the general balance of payments recorded a surplus of US $ 60.6 million in 2020, compared to a deficit of US $ 48.9 million recorded in 2019.

With the measures announced in the 2021 budget, the Finance Minister had said that Guyana’s real Gross Domestic Product (GDP) is projected to grow 20.9 percent, with the non-oil economy growing by 6.1 percent.

However, he explained that the projection was based on the assumption that the reopening of the economy occurred with COVID-19 restrictions being gradually lifted and, therefore, subject to significant risks of disadvantage. Similarly, the agriculture, fishing and forestry sector is expected to expand by 5.6 per cent while the mining and quarrying sector is forecast to grow by 39.1 per cent.