Guyana is a small low income country. The third smallest country in South America after Suriname and Uruguay, it has about 800,000 inhabitants. It is the third poorest country in the Western Hemisphere, after Haiti and Nicaragua, with a per capita GNP of approximately US$3,847 (2013).
Guyana is well endowed with natural resources, with fertile agricultural lands, bauxite, gold and extensive tropical forests which cover more than 80 percent of the country. Guyana has one of the lowest deforestation rates in the world and 90 percent of Guyana’s forest remains intact. Most of the country’s indigenous population lives in forests on which they depend for their livelihood. About 90 percent of the population lives on the narrow coastal plain, where population density is more than 115 persons per square kilometer.
Since 1992, there have been four free general elections, but political parties are divided along ethnic lines. This has periodically resulted in civil unrest and violence, particularly around the 1997 and 2001 elections. In November 2014, the parliament was prorogued, and elections have been scheduled for May 11, 2015.
Guyana generates a large share of its economic activity from agriculture and natural resources sectors. In 1993, the traditional sectors of sugar, rice and bauxite accounted for 30.4 percent of Guyana’s GDP and 57.7 percent of the country’s export earnings. Despite progress in diversifying the economy, the mining sector accounts for 11 percent of GDP, and the agriculture sector for 20 percent of GDP (including the sugar sector contributing 4 percent to GDP). These sectors also continued to be the largest source of direct employment across the country. The contribution of the gold sector more than doubled during the last decade.
Over the last eight years, Guyana’s economic performance has significantly stabilized, expanding by an average of 4 percent per annum. This can be partly explained by the commodity boom, favoring its base of extractive industries along with significant foreign direct investment (FDI). The timely introduction of a Value Added Tax (VAT) and the implementation of debt relief agreements, under the Heavily Indebted Poor Countries Initiative (HIPC) along with the Multilateral Debt Relief Agreements Initiative (MDRI) have contributed to Guyana’s macroeconomic resurgence.
However, growth slowed down in 2014 (3.8 percent) reflecting the softening in global commodity prices – mainly gold and bauxite. The construction sector performed well in light of ongoing infrastructure projects and the manufacturing sector is estimated to have benefitted from higher value added in rice and sugar.
The economic outlook for Guyana is broadly positive. Growth is projected to remain strong, averaging about 4 percent per year over the medium-term. Economic activities will be driven by continued investments in primary industries. Potential offshore and hydro-energy projects may also attract foreign investment and boost growth. Inflation is expected to remain relatively subdued. Nonetheless, volatile commodity prices represent a significant risk.
Last Updated: Apr 01, 2015