Guyana’s economy is projected to record an estimated real oil gross domestic product (GDP) growth of 20.9 percent while the non-oil economy is estimated to grow by 6.1 percent for 2021, this is according to the Bank of Guyana, as published in their Quarterly Report and Statistical Bulletin, March 2021.
The growth rate of real GDP is one of the most common indicators used to track the health of a nation's economy. In simple terms, an increase in real GDP is interpreted as a sign that the economy is doing well. Prima facie, a healthy economy would mean lower unemployment rates and higher wages.
Guyana’s economic growth can be compared to the global economic growth which is projected at 6 percent for 2021, a 0.5 percent increase from the previous forecast, on account of optimism surrounding vaccine rollouts as well as renewed fiscal and monetary countermeasures in several major economies (World Economic Outlook, April 2021).
While the optimism linked to vaccine rollouts to tackle the COVID-19 virus has contributed to the predictions, the spread of new strains of the virus have cast some uncertainty on the robustness of the recovery on developing economies, and must be taken into consideration.
The performance of the Guyanese economy is expected to stem from expansions in all the major sectors due to the reopening of the economy, as the Ministry of Health has been conducting a rigorous vaccination campaign with intention of inoculating the population to achieve herd immunity.
The new variants of the COVID-19 virus are also expected to touch the shores of the country and pose some risk of uncertainty. Notwithstanding, the end of year inflation rate is expected to be 1.6 percent as the economy picks up.
“The external current account is projected to improve largely due to oil exports coupled with higher export prices for gold and rice. Total receipts of foreign currency by the Bank of Guyana are estimated to increase to US$902.3 million while total payments are targeted at US$838.9 million,” the Bank of Guyana reported.
The central government’s overall balance is anticipated to marginally improve to 90,285 million GYD, leading to increased revenue earnings from taxation despite the anticipated growth in expenditure.
On the other hand, the country’s Non-Financial Public Enterprises (NFPEs) overall deficit is expected to widen as public enterprises slowly recover from the effects of the coronavirus pandemic.
Specifically, Guyana Sugar Corporation (GUYSUCO) is anticipated to record an increase in both capital and current expenses as efforts continue towards increasing the capacity of the existing estates and reopening those that were closed.
Total public debt is expected to expand to 3,137.9 million USD, due to increases in both domestic and external debt stock while debt service payments are anticipated to rise and growth in domestic debt stock will reflect higher issuance of treasury bills for fiscal support while the increase in external debt will stem from greater obligations to multilateral creditors, the Bank of Guyana reported.
Interest rates in the country are expected to remain relatively stable in 2021, reflective of the adequate level of liquidity within the banking system. The financial system is expected to remain sound due to measures taken by the Bank to mitigate any threat as a result of the ongoing pandemic.