The world's fastest growing economy is
this tiny nation tucked in between Venezuela, Brazil
and Suriname. Guyana, this nation of about 800,000 people. is going through
a massive transformation. And the reason for that growth, is
quite simple: oil, lots and lots of oil. Outside the US, I think like almost all of
the oil is being discovered in Guyana these days. Guyana is really where the action is, Here's how Guyana's growth stands out
compared to the rest of the world. Its economy will expand
by a staggering 27% in 2024. The oil reserves are so vast
that Venezuela's President, Nicolas Maduro, has escalated long-standing
claims over the Essequibo region, which makes up about 70% of Guyana's
territory. In addition to the threats from its
neighbor, the oil poses other challenges. That's because while natural resource
windfalls can create phenomenal wealth, they can also cause problems
such as hyperinflation, social and political upheaval,
and a widening wealth gap. It is leadership that we need that acknowledges, that it is very difficult
to avoid the resource curse So how can Guyana toe
the line between making the biggest oil discovery of the past decade
and avoid the pitfalls that have doomed so many other petro states? I've covered this region
for more than a decade, and I was born in Caracas,
where I witnessed firsthand the collapse of Venezuela's once booming economy
brought down by years of corruption and mismanagement of the world's
largest oil reserves. Walking through the streets of Georgetown,
you wouldn't immediately think you're in the capital of the world's
fastest growing economy. While there are major construction projects taking place and oil executives
flooding into the city, there's still a long way to go in terms
of infrastructure and public services. Decades of little to no investment
in education is part of the reason why much of the Guyanese
workforce is unprepared for the highly skilled jobs
required for the oil industry. Because of oil being found in Guyana,
they have more opportunity because there is more companies coming in
and they need people to hire. They will use some of the locals,
train them. If it's a higher role, they will definitely bring other people
outside of Guyana. About half of Guyana's population lives abroad because of a historic
lack of opportunities in the country. But the oil transformation has lured
some Guyanese back, like Sebastian de Freitas, who joined up as an ROV pilot
for offshore oil platforms. I've come back and I see how things are rapidly
changing and moving. Yes, I do want to be part of it. I do want to see people benefit. You can see that there's a shift. There's a change in the mentality
of the average Guyanese in Georgetown. For most of the almost 60 years
since it declared independence from Britain, Guyana has been one of the poorest countries
in South America. But now it's set to produce more oil
per person than anywhere in the world. So the reserves stand in excess of 11 billion barrels,
but that is fastly growing. But massive natural resource
wealth isn't always good news. Countries that have discovered
massive oil reserves are often prone
to what is known as the paradox of plenty. This chart shows how after the initial
burst of growth, when oil is discovered, economies that are more dependent on oil
exports experienced slower growth. That's partly because as more money flows
into an economy to buy the oil, the country's currency
becomes more expensive, making other exports also more expensive. Before its oil was discovered, Guyana's economy generated
just $11,000 per person each year. Now, its GDP per capita
has already surpassed that of Italy. And on its current trajectory could overtake
the United States by the end of the year. The other obvious problem
when you get a huge influx of money is that there's
a massive risk of inflation. A lot of people are stressed out because the cost of living is rising. I think you need to fight for a better wage
constantly. In Guyana,
this newfound wealth has a risk of further of deepening inequality
tied to historic ethnic divisions. The nations in Indo-Guyanese population
largely occupies the top 10% of wealth, while Afro-Guyanese and other groups
are concentrated in the bottom 90%. The Guyanese have mixed feelings
about how the profits are reaching them. Those who are getting jobs in the industry
seem more optimistic. Delroy
McLean works at a construction site near one of Georgetown's
poorest neighborhoods. From my childhood, I grew up right here on the wharf,
so this is my home, this is my backyard, my playground. Financially, I'm in a better position to help my family,
to help myself better. We need leadership that acknowledges
that this is a difficult society. There are cleavages in this society
that can't just be eliminated by government spending. The country that has best managed to escape the resource curse is Norway. After oil and gas were discovered
in the North Sea in the 1960s, Norway eventually set up
a sovereign wealth fund. In other words, it took most of the riches
generated by its oil and invested it. In fact, the fund
now owns an average of 1.5% of every publicly traded company
in the world. By investing most of the proceeds
abroad, the money did not flow
directly into the Norwegian economy. Meaning no hyperinflation, no massive
strengthening of the Norwegian krone. And when the oil and gas do
finally run out, the country will still be sitting on a pile of wealth
that will ensure its prosperity for generations to come. So can Guyana just copy the Norwegian
model? Well, no not exactly. Norway was already a fairly
developed economy when it found its oil. It had railways, factories
and a strong education system. Guyana is a tiny economy
in the grand scheme of things, and for the most part hasn't invested
in that sort of infrastructure until right now. We are investing
in creating new opportunities for growth. We are investing in creating opportunities
for the expansion of the economy. We are investing in opportunities
to give people a better quality of life. This school is just
one of the many public works we're seeing being built across
Georgetown. Essentially, it looks like
Guyana has to strike a balance. Invest in necessary
infrastructure and diversification, but at a sustainable pace. The president says he's aware of the risk. We are very mindful about overheating. It has not happened as yet
because of our policy formulation. The country does have a natural resource fund,
but there are concerns about the rules governing it, which may be put to the test
in the coming years. One concern is the mere size of the government
that it's growing. The economy is becoming largely
an oil economy, that diversification is clearly going to be even more difficult
than it was before. For now, it's boom time in Guyana. I consider myself blessed because there's
a bit of a right place, the right time. So I'm very thankful to the big man.
