There is a small country that in a few years went from being a peripheral economy of South America to become one of the most striking cases of economic growth in the world.
The discovery and exploitation of huge oil reserves in deep waters changed the profile of this country of less than a million inhabitants, located between Venezuela, Surinam and Brazil, and with an identity strongly linked to the Caribbean.
We are talking about Guyana.
According to a Reuters report, the country was already considered the world’s fastest growing economy before The conflict between the United States-Israel and Iran will raise international crude oil prices, or unrefined oil..
This scenario of global energy tension can further expand the oil revenues of Guyana, which has reserves estimated at about 11 billion barrels.
Guyana’s great leap
According to the World Bank, Guyana’s GDP grew 43.4% in 2024driven by oil production that reached 225 million barrels that year. The organization also highlighted that non-oil growth was 13.1%, supported by public investment, construction, manufacturing and agriculture.
The speed of change is largely explained by the Stabroek block, operated by a consortium led by ExxonMobil.
Reuters reported that Production exceeded 900,000 barrels per day in just seven yearsan unusual pace for offshore projects of that scale. Between the start of production, in 2019, and 2024, Guyana’s GDP multiplied by more than four to reach about $27.5 billion.
The boom challenge
The transformation is already noticeable in Georgetown, the capital. The expansion of the oil industry promoted works, hotels, offices, homes and services associated with the energy sector. It also opened opportunities for local transportation, food, health and logistics companies seeking to integrate into the oil value chain.
The government tries to keep a greater part of that wealth within the country. To that end, Guyana moved forward with “local content” ruleswhich oblige companies in the sector to contract certain services with Guyanese suppliers. According to Reuters, the authorities are considering expanding these requirements so that more areas are covered and to increase some percentages of local hiring.
Although the macroeconomic figures are exceptional, Much of the growth is concentrated in oil. Reuters noted that oil, gas and related services accounted for more than 75% of the country’s GDP last year, a figure that shows the risk of an economy overly dependent on a single sector.
The International Monetary Fund also noted that Guyana’s outlook remains “highly favorable,” with expanding oil production and non-oil growth sustained by investment in infrastructure, diversification and welfare programs.
The big question is how to manage the bonanza. Guyana created a sovereign fund to manage oil revenues and finance development projects, but the population still lives with structural problems: electricity outages, insufficient infrastructure, limited urban services and rising cost of living.
Furthermore, since the country does not refine its own fuel, must import gasoline, diesel and other derivatives. This means that a higher international oil price can benefit public accounts, but also make basic products, transportation and energy more expensive for households.
Guyana’s challenge is to avoid a story known in Latin America: grow quickly for a natural resource, depend too much on it and become exposed to international price cycles. Therefore, the discussion is no longer just how much oil it can produce, but what it will do with that wealth.
