The Finance Ministry’s Mid-Year Report for 2021 has revealed that Guyana recorded real Gross Domestic Product (GDP) growth of 14.5 per cent, while non-oil GDP grew by 4.8 percent, despite the challenges of the COVID-19 pandemic and even the devastating floods experienced in May-June.
In a release on Tuesday evening, the Finance Ministry said that due to the unprecedented floods, which impacted particularly the agriculture, forestry and mining sectors, along with the lingering effects of the COVID-19 pandemic, the effects of which will spill over into the last half of the year and even beyond, the revised full-year forecast for real GDP growth in 2021 is now 19.5 percent overall and 3.7 percent for the non-oil economy.
The Mid-Year Report is expected to be tabled by Finance Minister Dr Ashni Singh at the first sitting of the National Assembly, once the Assembly resumes after its current recess.
According to the release, in regard to sector performance, the agriculture, forestry and fishing industries for the first half of 2021 are estimated to have contracted by 2.4 percent, compared with a decline of 4.1 percent for the corresponding period last year; and it was noted that this was as a result of lower output from the other crops, sugar growing, forestry and fishing industries.
“At the end of the first half of the year, the Guyana Sugar Corporation (GuySuCo) produced 29,650 tonnes of sugar. This performance reflects the record high levels of rainfall, which resulted in waterlogged soils, particularly at the Albion Estate, and strike action that resulted in over 5,600 man-days being lost,” the Mid-Year Report indicated.
As such, it was emphasised that the sugar industry declined by 22.4 percent when compared to the same period in 2020. Some of the reasons indicated were a 30 per cent mortality of mature cane at Albion estate, 10 percent at Uitvlugt, and 5 percent at Blairmont due to the floods.
Another 15,000 tonnes of sugar in the second crop was also expected to be lost, based on the Report.
Meanwhile, the Report noted that the rice industry grew by an estimated 7.8 per cent in the first half of the year, marginally lower than the target set for the period. ‘Other crops’ declined by 7.3 percent due to the floods, and the livestock industry was estimated to have grown by 10.6 percent when compared to the same period in 2020.
However, for that same period, the fishing industry contracted by an estimated 6.6 percent and the forestry industry by 7.1 percent.
Referring to the extractive industries, the Report indicated that in the first half of 2021, the mining and quarrying industries were estimated to have grown by 23.1 percent, with higher output from the petroleum and other mining industries, despite contractions in gold and bauxite.
It was noted that total output from the petroleum sector increased by 65.4 percent when compared to the same period last year. With respect to diamond, sand and stone, these were estimated to have seen a total growth of 63.3 percent, with quarry stone having a growth output of 141 percent, sand declarations growing by 119.3 percent as a result of increased activity in the construction sector, while diamond declarations improved with a growth of 166.3 percent.
The outlook for the remainder of this year for other mining industries was estimated to be promising as well, with an estimated growth rate of 74.5 percent for the entire year.
In regard to manufacturing, this sector notably saw an estimated growth of 13.1 percent when compared to the same period last year, with expansion of the sector being attributed to a growth of 23.1 percent in other manufacturing. In the category of other manufacturing, growth was experienced in the manufacturing of non-metallic products, chemical products, and beverages.
Meanwhile, the services industries were estimated to have expanded in the first half of 2021 by 9.4 percent when compared to the same period in 2020, as it was noted that the measures to curtail the impact of COVID-19 had severely impacted such activities last year.
Notably, the Report indicates that the gradual relaxation of these measures would have contributed to some growth in the sector.
The Report also noted the strong performance of the construction sector, which grew by 25.5 percent in the first half of 2021, reflecting increased emphasis on implementing the public sector investment programme as well as increased Private Sector construction reflecting improved Private Sector confidence and optimism regarding the economic outlook.
Balance of Payments – larger merchandise trade surplus
The Mid-Year Report noted that at the end of the first half of this year, ‘the overall balance of payments recorded a deficit of US$67.4 million compared with a deficit of US$2.8 billion at the end of June 2020, with the current account registering a deficit of US$39.1 million in comparison to a deficit of US$396.5 million for the corresponding period in 2020. This was attributed to a ‘significant increase in the merchandise trade surplus, which moved from US$72.7 million to US$813.3 million. The merchandise trade account, according to the Report, improved as a result of export receipts expanding by US$786.9 million, outweighing the US$46.2 million increase in imports.
Meanwhile, the Capital Account showed a deficit of US$19.6 million when compared with a surplus of US$419.7 million at the end of June 2020. This is attributed to ‘outflows of US$1,713 million from private enterprises in the oil and gas sector, along with outflows of US$123.6 million in revenue from the petroleum sector to the Natural Resource Fund’. The Report also highlighted the fact that foreign direct investment in the first half of 2021 was 41.6 percent higher than the US$940.6 million recorded last year for the same period.