By Samuel Sukhnandan
Businesses would be taking a huge risk to lay out any substantial investment on massive imports for Christmas 2017; and worse yet, investing on the importation of premium products.
This is according to Financial Analyst and former Alliance For Change (AFC) member Sasenarine Singh.
Companies importing low-end Chinese-made products are more likely to do better than the high-end product sellers, Singh has claimed. One can therefore expect a growing reliance on the Chinese “discount price” stores, rather than the boutique type (higher priced) stores.
“This is a direct explanation of the fact that the masses are getting poorer and the populations of the masses are expanding in Guyana, thanks to the policy paralysis that is in full force today,” he said.
Recent statistics show that food prices have increased by 4.2 per cent over the 12 months leading up to August 2017, according to the latest data from the Guyana Bureau of Statistics.
Singh has said that, based on his research, non-food retailers will continue to struggle this Christmas, with sales expected to show flat growth in the fourth quarter. He recalled that back in 2012, data produced showed that non-food retailers were expecting 8 per cent growth in the last quarter.
“At that time, one big Regent Street businessman told me he is expecting, in November-December 2012, to generate half of his annual sales. Today he is telling me (that), compared to those days, he is importing half as much and his volumes are falling, and thus he has to push prices up to cover his fixed cost.”
In addition to this, he said, the businessman in question has since not replaced a staff member who left the business in August 2017, because he cannot pay that additional body.
But what is most affecting this businessman is the weakened Guyana dollar, which continues to slide despite the Bank of Guyana injecting foreign currency into the system — which is having an adverse impact on the international reserves.
“These are all paradigm discoveries that even the Minister (Winston Jordan) seems unaware of. The cash-strapped consumers are caught in a financial cul-de-sac where they are discouraged from shopping over the seasonal period because of three factors: flat remittance inflows from overseas; ‘skimpish’ salary increase from the employers, including the Government; and abnormal increase in prices,” Singh explained.
The overseas-based financial analyst noted that the greatest consumer of people’s money today remains utility bills, housing cost (mortgage/rent), transportation, and food. And with the oil prices creeping up, Guyanese could expect another increase in the fuel prices at the pump before the end of the year, thus leaving less for seasonal spending at Christmas.
“I wonder why the policymakers are virulent to the idea that Guyana needs its own oil refinery, which would bring stability to the country’s largest import cost and consumer of foreign currency. But, then again, the powerful groups that control the narrative in Guyana are not listening, and one just has to reflect on the utterance of President Granger in Atlanta in November 2017 and you would realize (that) he just does not get it,” Singh opined.
The analyst concluded that the year 2017 is shaping up to be one of the most significant years of inflation in the last decade, and this is what will drive sales at Christmas, not volumes, he said.
“Based on my analysis of the first 9 months of data out of the Bank of Guyana, I am convinced in my conviction that volumes at Christmas will be flat, and sales will be mostly driven by the higher price of commodities,” he noted.
Singh also highlighted the increased cost of education in Guyana, which has risen by 2.6 per cent over the same period. Education cost previously declined by 5 per cent from 2009 to August 2016. But more than half of that gain was erased when education Value Added Tax (VAT) was imposed by the David Granger-led administration. “Is this the good life for the students of Guyana?” he questioned.