Finance Minister reports ‘dismal’ 2.6% real growth rate as economy slumps further in 2016

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Guyana’s economic performance this past year was “dismal”, according to Finance Minister Winston Jordan, and the country has even failed to meet the projected targets that were already revised downwards at mid-year.jordon
The bleak report on the state of the nation’s finances was laid bare in the National Assembly as the Finance Minister on Monday presented a $250 billion Budget for 2017.
During his presentation to the members of the National Assembly which was broadcast live across the country, Minister Jordan indicated that gold continued to be the only boon, since “the economy felt the drag of dismal output performances in sugar, rice, forestry, and construction, including housing”.

Meagre growth

Jordan used the occasion to recall that the budget for 2016 projected an overall real growth rate of 4.4 per cent. At mid-year, a real economic growth rate of two per cent was achieved. “However, since several industries and sectors, including sugar, rice, construction, and wholesale and retail trade, were showing signs of distress, already, the projected growth rate for 2016 was revised downwards to four per cent”.
According to Jordan, “since then, several unexpected developments, including the downsizing of Barama and Demerara Timbers Limited’s operations in the forestry sector; structural changes and ongoing strikes in the sugar industry; and the slow pace of implementation of the Public Sector Investment Programme (PSIP) conspired to reduce the real growth rate to 2.6 per cent.”

Agri returns dismal

In an update on the various sectoral performances, Minister Jordan noted that the agricultural sector has contracted and was expected to continue its downward spiral. He said a dismal performance was expected for all sub-sectors, except fishing and other crops. “Despite an encouraging recovery in 2015, sugar is projected to decline by 18.7 per cent, to reach 188,000 metric tonnes in 2016.” He has blamed the low production on the El Niño dry spell experienced earlier in the year which resulted in lower yields, combined with late planting and the frequency of strikes, during the second half of the year.

As it relates to rice, the Minister said due to continued uncertainty in the rice industry, output was expected to reach 600,000 metric tonnes in 2016, representing a decline of 12.8 per cent from the target achieved in 2015. Rice production will remain stagnant for 2017, he added. “The El Niño weather phenomenon and the loss of the lucrative Venezuelan market contributed significantly to the decline in production level.”

With regard to the forestry sector, which, over the years, had contributed significantly to overall economic growth, the Minister reported that this was not the case for 2016.
Minister Jordan stated that “the forestry sub-sector is expected to contract significantly by 33.3 per cent, principally as a result of Barama halting the production of logs and the UK’s restriction on greenheart logs originating from Guyana”.

Gold boon

The mining and quarrying sector has continued to provide buoyancy for the national economy. Minister Jordan reported to the House that “the mining and quarrying sector is projected to grow by 35.7 per cent in 2016, the highest in over a decade”.
Gold production, he said, is expected to reach 644,814 ounces as a result of the combined efforts of small and medium-sized miners responding to the concessions granted by Government and rising global gold prices, and the two foreign-owned companies reaching full capacity. “The bauxite industry is expected to grow by 9.6 per cent, while the other mining and quarrying sector is projected to rise by 22 per cent, mainly on account of a 92.5 per cent increase in sand production and a 9.2 per cent increase in stone production.”

He did use the opportunity to announce that despite the fears that were promulgated by some suggesting that concessions would be removed, this was not the case.

On the matter of the manufacturing sector, Jordan said this was projected to contract by 7.1 per cent, as a result of the dismal performance of the sugar and rice sectors, as well as a small decline in other manufacturing and construction.
Construction, he said, declined from a budgeted 10.5 per cent to a projected 3.2 per cent in 2016.

“This performance is related to a decline in activity in the housing sector and PSIP…the services sector is expected to expand by 1.3 per cent, with growth driven by the electricity, water, finance and insurance, and transport and storage sectors. The sector’s share of GDP continues to remain above 40 per cent.”

Inflation

The Minister did report favourably on the inflation rate, which he said remained moderate in 2016.
The 12-month inflation rate stood at 1.1 per cent as of October 2016, according to Minister Jordan.
He reported too that prices were projected to remain relatively stable through the end of the year, resulting in an inflation rate of 1.3 per cent. (Guyana Times)

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