Guyana leading Caribbean once again with highest FDI inflows

-UN ECLAC report states

Guyana recorded the highest Foreign Direct Investment (FDI) inflows in the Caribbean for 2022, which totalled US$4.389 billion.

This is according to the United Nations (UN) Economic Commission for Latin America and the Caribbean (ECLAC) ‘Foreign Direct Investment in Latin America and the Caribbean’ 2023 report.

An aerial view of Georgetown, Guyana

The performance is due, once again, to foreign investors’ interest in Guyana’s hydrocarbon sector. Hence, the natural resources sector accounted for 99 per cent of FDI inflows into the country in 2022, despite inflows into the sector being 2 per cent lower than in 2021.

The country also recorded the highest FDI inflows in 2021.

The report also notes that Guyana’s announcements registered in 2022 “indicate that the country’s hydrocarbon sector will continue to receive large investments in the coming years”.

Further, it outlined that the inward FDI in the non-renewable energies sector in Latin America and the Caribbean reflects not only the high volatility inherent to the sector— which it noted stems mainly from fluctuations in the prices of such energy sources on international markets, but also the discovery of new hydrocarbon sources in the region and changes in the structure of local markets.

The report states that, “It is possible to identify FDI entering the hydrocarbons sector in six of the region’s countries (Brazil, Colombia, Guyana, Mexico, the Plurinational State of Bolivia, and Trinidad and Tobago). Between 2000 and 2022, these six countries absorbed an annual average of US$ 7.214 billion channelled to the sector.”

ECLAC also outlined in the report that larger inflows in certain years may be associated with the discovery of oil reserves, exemplifying Guyana, where since 2018, average FDI inflows in the sector rose from US$ 6 million per year in the decade between 2002 and 2011 to US$ 814 million per year in 2012–2021.

“Since then, FDI in the sector has accounted on average for more than 90 per cent of the country’s total inflows,” the report noted.

Since the first discovery of offshore oil deposits in Guyana in 2015—owed in large part to the exploration activities of US oil company ExxonMobil, Guyana has continued to expand its oil reserves each year, as well as the oil produced, and the revenue derived from the production of oil.

Meanwhile, the report also stated that Guyana and Mexico account for the large majority of growth in the coal, and oil and gas and renewable energy sectors in 2022, owing to higher global energy prices and ongoing energy transition efforts.

The report details that the sectors grew in importance last year, mainly due to large projects announced in Guyana and Mexico, which together totalled over US$ 22 billion and accounted for 93 per cent of the total for projects in the sector.

The renewable energy sector ranked third, with an amount close to US$ 11 billion and 40 per cent growth on the previous year. The most noteworthy projects in the United States also include oil extraction projects in Guyana.

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