Home Letters Guyana will see rapid growth and expansion, despite inflation
Earlier this year, Senior Finance Minister Dr Ashni Singh had indicated that Guyana would be one of the fastest-growing economies in terms of real GDP, and would see rapid transformation in a number of sectors, especially since Government would make efforts to boost the non-oil economy as well.
Despite the challenges of the COVID-19 pandemic, coupled with the unprecedented devastating floods experienced in May-June, which impacted particularly the agriculture, forestry and mining sectors, Guyana was able to recorded real Gross Domestic Product (GDP) growth of 14.5 percent, while non-oil GDP grew by 4.8 percent.
While the lingering effects of the COVID-19 pandemic spilled over into the latter part 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.
However, the agriculture, forestry and fishing industries, for the first half of 2021, were estimated to have contracted by 2.4 percent, compared with a decline of 4.1 percent for the corresponding period last year, and it has been noted that this was as a result of lower output from the other crops, sugar growing, forestry and fishing industries.
The rice industry grew by an estimated 7.8 percent 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. 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 has also been noted that total output from the petroleum sector increased by 65.4 percent when compared to the same period last year.
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 has been noted that the measures implemented to curtail the impact of COVID-19 have severely impacted such activities last year. Notably, the Report indicates that the gradual relaxation of these measures had 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.
At the end of the first half of 2021, consumer prices grew by 5.6 percent. This was largely driven by increased food prices, as a result of the inclement weather and shortages experienced following the flood.
Further, the Report indicated that the bottlenecks in the global supply chain add some measure of imported inflationary pressures. However, the Report underscores that the price increases are ‘transitory’, and are unlikely to have lasting long-term impact on inflation. Inflation is now projected to be in the order of 3.8 percent for the full year.
Despite the negative impact from the effects of the present inflation, our country will see rapid expansion in the services sector, including transport and logistics; construction of infrastructure, including roads, bridges, office buildings in the Private Sector, etc, along with expansion in other services such as financial services, all of which will contribute to rapid expansion in real output. And we are going to see Guyana being one of the fastest-growing economies in real GDP terms….
Globally, in the hemisphere, and certainly in the Caribbean, a lot of the real GDP growth in the region will be driven by Guyana.
Guyana’s favourable economic performance in the non-oil economy at the end of the first half of 2021 bodes well for the upcoming second half of 2021 and beyond. It is expected that advances in key investments in both the Public and the Private Sectors will buttress the second-half performance of the economy.