Economy grew by 4.5% at mid-year
Finance Minister Winston Jordan
Finance Minister Winston Jordan

…projected growth revised upwards to 3.7% for 2018

THE economy grew by 4.5% at mid-year the Ministry of Finance said on Wednesday and has revised its projected growth for this year to 3.7%
In the mid-year report which was tabled in Parliament on Wednesday, the ministry also indicated that non-sugar growth rate is estimated to have climbed to 5.1 percent from a revised 2.8 percent. ‘Preliminary data indicates that this growth, for the first half of 2018, was more broad-based than the previous year with robust performances in agriculture, fishing and forestry, of 3.4 percent; services, of 8.2 percent; and construction, of 13.4 percent. The significant increase in the construction sector was evidenced by higher building imports by 24.7 percent, supported by the increased pace of execution of the Public Sector Investment Programme (PSIP), which rose by 3.9 percentage points above the previous half year.’” The report stated.

Additionally, the report pointed out that the exchange rate remains stable at $212.7 to the U.S. dollar; official exchange rate of 208.5 recorded by Bank of Guyana. Inflation remains subdued at 1.3%; Public debt levels unchanged and sustainable and the rising commodity prices, climate change and turbulent international trade relationships are threats to Guyana’s economy.

Noting that the Guyana economy is estimated to have grown by 4.5 percent, comparing favourably with the revised growth rate of 2.5 percent for the first half of 2017, the report stated that private sector investments also improved, with, for example, real estate mortgages rising by 5.0 percent at the end of the review period, compared to 4.1 percent at the previous half-year. 3.2.

In the first half of 2018, the agriculture, fishing and forestry sector grew by an estimated 3.4 percent, despite the sugar and rice industries contracting by 30.6 percent and 3.8 percent, respectively. The other crops, fishing, livestock and forestry industries all experienced growth over the same period, with the latter two growing by a commendable 29.1 percent and 18.1 percent, respectively.

The report noted that the expansion in the industry was driven by the production of logs and roundwood, which increased by 24.8 percent and 46.6 percent, respectively. “This favourable out-turn was largely due to increased demand from China, India and the U.S., which saw exports in the first quarter of 2018 increasing by 17.1 percent; by the end of the first half, the increase was 7.9 percent. Producers also expanded their output in response to local demand from both the private and public sectors. This was partly attributed to government?s successful effort in lobbying for a hike in the CARICOM common external tariff on imported pine lumber, which has allowed additional market share for local lumber yards.”

The report noted that growth in the forestry industry was also buoyed by higher plywood production, which grew by a significant 73.4 percent, with the main producer signalling the intention to maintain production above 1,000 cubic metres per month. The forestry industry is expected to continue its expansion into the second half and remains on track to at least meet its growth expectation of 8.0 percent, for 2018. However, a cautionary note: the prolonged rainy season has resulted in a significant deterioration of hinterland roads and poses a risk to production. Recognising this, the government has intervened to implement emergency maintenance works.

The efforts of the National Agricultural Research and Extension Institute (NAREI), to advance the diversification of crop production, continue to be a success, with the other-crops sector reporting growth of 0.8 percent, in the first half of 2018. The overall level of production (as reported by NAREI) increased by 5.2 percent over the same period. This expansion was largely driven by an increase in the production of fruits, vegetables, citrus, and spices and seasoning, all of which recorded notable growth over the review period. The production of fruits, which recorded the strongest growth, was buoyed by remarkable growth in watermelons, passion fruit, pineapples, cashews, and “other fruits”, which increased by 35.0 percent, 61.7 percent, 7.0 percent, 76.1 percent and 2.8 percent, respectively.

Gov’t makes gains
Finance Minister Winston Jordan highlighted in the report that government has made gains on putting its macroeconomic and development agenda on a strong foundation. He said the initiatives taken during the first half – and which will be accelerated during the second half of 2018 – brought greater clarity to the government?s priorities, with emphasis on spending on growth-enhancing opportunities such as construction. He said notwithstanding the constraints and risks that beset the country, overall performance of the economy improved significantly, compared to the same period last year. “Higher positive growth of 4.5 percent was achieved at the half-year, and the prospects for the fiscal year are positive and encouraging. The revised growth target for 2018 is 3.7 percent, 1.6 percentage points above that achieved in 2017. This is anticipated to be driven by improvements in agriculture (except sugar), construction, wholesale and retail trade, and other service activities,” Jordan said.

He noted that the non-financial public sector deficit is expected to improve due to higher revenue collections, notwithstanding the significant portion attributed to arrears collection and lower grant receipts. However, according to the minister, expenditure pressures continue to be faced, especially as the restructuring of the sugar industry advances. He said diversification and institutional strengthening continue to be pursued, even as the government ramps up the capacity-building needs, especially in relation to oil and gas, and complemented by ongoing institutional engagements with the private sector within the manufacturing and services industries. “The key to Guyana’s development must not be seen, only, in its great natural resources wealth. Rather, it must lie in the ability to harness the strengths of its people, who employ technology and innovation to turn the rich natural resources into a bountiful harvest of growth and development. The good life for all Guyanese continues to be the enduring focus of this administration,” Jordan concluded.

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