Guyana: Strong Growth Outlook, Risks Remain Contained

• The Guyanese economy is projected to experience robust growth, with estimates indicating an increase of 11.7% for the period of 2025-2026. This marks a notable decline from the staggering 43.6% growth estimate for 2024, attributed mainly to less favourable base effects.
• In a noteworthy development, new tariffs imposed by the United States are not expected to significantly impact Guyana's growth trajectory as most of the country's exports to the U.S., primarily oil and gold, are exempt from these tariffs. The continued expansion of oil production is set to ensure that net exports remain a vital driver of economic growth in the years to come.
• The surge in oil revenues is also anticipated to provide the government with substantial fiscal flexibility, allowing for sustained stimulation of consumption and investment in the non-oil sector. However, lower global oil prices pose a moderate challenge to this outlook.
• As a result of these dynamics, Guyana's fiscal deficit is projected to shrink from an estimated 7.4% of GDP in 2024 to 6.9% in 2025. This narrowing of the deficit is less than previously forecasted, due in part to a weaker outlook for oil revenues amid declining global prices. The government's commitment to increased spending is likely to bolster support for President Irfaan Ali and his People's Progressive Party/Civic (PPP/C), positioning them favorably ahead of the general election slated for November 2025.
• Meanwhile, ongoing tensions with Venezuela over the contested Essequibo region continue to represent a potential external security risk. However, experts suggest that the likelihood of military action remains low in the short term, given the severe repercussions this would likely entail for Venezuela.

(Source: Fitch Connect)