Gold inflates Guyana’s GDP again

…as traditional pillars return horrendous performances

Guyana’s mining sector continues to be the boon for the economy as the traditional pillars of the economy continue to perform disastrously with under-performance by as much as 30 per cent of what was projected in certain sectors.Gold bar

This is outlined in the 2016 Mid-Year Report presented to the National Assembly on Monday by Finance Minister Winston Jordan.

Gold has since recorded its highest production ever in Guyana’s history, returning a whopping 322,493 ounces for the first half of the year. This has since prompted the Ministry to revise it 2016 projections for gold to an anticipated 650,000 ounces.

The mining and quarrying sector grew by 65.7 per cent during the first half of 2016 which Minister Jordan said was, “buoyed by significant growth in the gold industry and improved performance in the bauxite industry.”

In fact, gold as an isolated activity saw an increase in production of 94.3 per cent over the corresponding period last year.

The performance of the sector was credited to improved oversight of the industry and granting of concessions.

The bauxite industry as an isolated sector delivered a creditable performance, with a 3 per cent growth. The ‘other mining and quarrying sector,’ grew by 13.9 per cent, “mainly driven by a 16.7 per cent growth in the diamond industry.

This was the extent of the positive news in the Finance Minister’s 2016 mid-year report on the performance of Guyana’s economy during the course of the year.

The Guyana Sugar Corporation (GuySuCo) has once again recorded a dismal performance during the first half of the year.

According to the Finance Minister’s report, the Agriculture, Fishing and Forestry sectors collectively, declined by 10 per cent over the previous year.

Minister Jordan has since reported that sugar recorded a disappointing 56,645 tonnes which is 30 per cent below what was projected for 2016.

The Finance Ministry has since blamed the significant shortfall as being mainly due to the severe El Niño dry spell.

“This combined with the Guyana Sugar Corporation’s inability to irrigate the fields coupled with delays in the acquisition of fertilizer and fertilizer application further compromised the quality of canes harvested,” Jordan reported.

The industry has since had to revise its projections downwards to 218,188 tonnes, as against the original projection of 231,145 for the year.

The rice sector also continues to return less than desired results. According to the Finance Minister, this sector also declined by a whopping 26 per cent compared with the same period last year. Rice production for the first half of the year was recorded at 265,818 tonnes.

The Finance Ministry has also identified the culprit for the dismal performance of the rice sector as the EL Niño dry spell. Early rains were also said to be due in part, for further losses which was also compounded by delayed payments by millers.

Production for 2016 has since been revised downwards from 687,784 to 600,000. The loss of the Venezuelan rice market continues to have a nagative impact on the industry since, according to Minister Jordan, “the industry is emerging from a price structure that was artificially inflated by the Venezuelan market.”

Minister Jordan in his report documents a 0.8 per cent growth in the livestock sector while the fisheries sector grew by 2.1 per cent and the ‘other crops sector’ also grew by 2.0 per cent.

A dismal performance were recorded in manufacturing which, according to Minister Jordan, contracted by 14.1 per cent during the first half of this year, largely as a result of the decline in the output of rice and sugar.

The finance minister reported that the financial and insurance industries grew by 5.9 per cent.

“Noteworthy performances occurred in the other services category due to the Jubilee celebrations. This resulted in an increase of 102 per cent in visitor arrivals in May 2016.”

The minister has since estimated that the spending stimulated over the period by the additional visitors resulted in increased activity in the hospitality sector including hotels, restaurants and craft markets, to name a few.

He noted however that that wholesale and retail trade, and construction, which amounts for approximately a third of the sector contacted by 11.3 and 7.5 per cent, respectively.

The minister in his report have since conceded that the positive growth in the mining sector and some subsectors served to partially offset the below par performances of the agriculture, construction, and wholesale and retail sectors.

The ministry has since revised downwards Guyana’s overall growth rate for the year to 4.0 per cent from the anticipated 4.4 per cent at the beginning of the year.