The International Monetary Fund (IMF) – a world-renowned financial institution – has projected that Guyana’s economy will grow by a significant 26.2 per cent in spite of the devastating effects COVID-19 is having on economies worldwide.
The World Economic Outlook (WEO) report, which is published by the IMF and has been released this month, showed that Guyana is the only country in the Caribbean and Latin American region projected to have real positive Gross Domestic Product (GDP) growth.
This growth is pegged at 26.2 per cent for 2020 – a considerable difference when compared to other territories in the region.
For instance, Trinidad and Tobago’s projected growth is -5.6 per cent while Suriname is -13.1 per cent and Barbados -11.6 per cent. Moreover, Guyana’s economy is projected to grow by 8.1 per cent in 2021.
This projected growth of Guyana’s economy is significant in the context of COVID-19, which has devastated economies worldwide and killed more than one million people globally.
According to the IMF report, the persistent output losses imply a major setback to living standards relative to what was expected before the pandemic.
Not only will the incidence of extreme poverty rise for the first time in over two decades, but inequality is set to increase because the crisis has disproportionately affected women, the informally employed, and those with relatively lower educational attainment.
The report further noted that the loss of human capital accumulation after widespread school closures poses an additional challenge.
The IMF also explained that with renewed upticks in COVID-19 infections in places that had reduced local transmission to low levels, re-openings have paused, and targeted shutdowns are being reinstated. “Economies everywhere face difficult paths back to pre-pandemic activity levels,” the report outlined.
According to the IMF, the baseline projection assumes that social distancing will continue into 2021 but will then fade over time as vaccine coverage expands and therapies improve, with local transmission brought to low levels everywhere by the end of 2022.
“Vaccine trials have progressed at an unprecedented rate, and some have reached the final testing phase prior to approval or rejection. Nonetheless, even after approval, vaccine coverage is likely to expand only gradually as it will take time to scale up production and distribute adequate doses worldwide at affordable prices. In countries where infection rates appear to have gone past their peak, persistent behavioral changes, together with enhanced workplace hygiene and safety standards, are assumed to keep new infections at a level that allows health care systems to cope with the caseload and without requiring a return to economy-wide lockdowns,” the report explained.
On the other hand, for other countries where infections are still rising, the baseline also assumes the possibility of renewed lockdowns for particular zones, even if stringent nationwide shutdowns are not repeated.
In Guyana, COVID-19 cases are rapidly rising, mainly due to the increased testing occurring under the new PPP/C Administration as opposed to what was obtaining under the previous APNU/AFC coalition. Notwithstanding, the death toll has climbed significantly, with 114 deaths as of October 19.
Meanwhile, global growth is projected at –4.4 per cent in 2020, 0.8 percentage point above the June 2020 WEO Update forecast. The stronger projection for 2020 compared with the June 2020 WEO Update reflects the net effect of two competing factors: the upward impetus from better-than-anticipated second-quarter GDP outturns (mostly in advanced economies) versus the downdraft from persistent social distancing and stalled reopening in the second half of the year.
“As discussed, a recovery has taken root in the third quarter of 2020. It is expected to strengthen gradually over 2021. The recovery is likely to be characterized by persistent social distancing until health risks are addressed—and countries may have to again tighten mitigation measures depending on the spread of the virus,” the report posited.
Guyana’s Government has already taken steps to reopen its economy with a relaxed curfew of 9 pm to 4 am and the approval for certain businesses like restaurants to operate in a restricted manner.
Moreover, the country recently reopened its international airports – with a number of scheduled flights weekly.
President Dr Irfaan Ali recently contended that studies have shown that locking down a country as the primary means of fighting COVID-19 would actually be counterproductive.
“What we have to do as leaders is to find the right balance and ensure that coming out of the pandemic, we do not head into severe economic recession. We already have a situation, where the economy has been affected tremendously. What we are doing is basically trying to find the balance while operating, managing, and living in COVID environment,” the President had said with respect to the Government’s move to reopen the airports.
“We have to also ensure that we develop strong protocols and guidelines and to have persons follow, stringently, those guidelines, so that these can be the buffer that gives us an opportunity to rebalance the way we deal with this, from a medical as well as a socio-economic perspective.” (Devina Samaroo)