A FANTASTIC YEAR SO FAR!

Sep 03, 2011 Features / Columnists, Peeping Tom

The world is in trouble.
In North Africa, one of the world’s major oil producers, Libya, is in turmoil and in the Middle East, Syria is in a similar situation. In Europe, a number of economies are reeling and in both Britain and America, stock markets have been anything but stable, leading to fears that another global recession is in the making.
These are the times of great economic uncertainty, unless of course you are China or India. It is against this backdrop that Guyana’s economic performance for the first half of this year must be seen as extremely promising.
When the budget targets were announced earlier this year, there were criticisms that these were too ambitious; that growth would not have been possible. Contributing to this negative outlook was the poor performance of the sugar industry last year.
But as has now been announced, Guyana has registered an impressive economic growth rate for the first half of this year and this will most definitely ensure that no matter what happens for the remainder of the year, Guyana will register another good year economically.
There are, of course, those who will question the numbers. But the theory of creative accounting of the growth rate has long been discredited. The Guyanese economy is too rigorously scrutinized internationally for any creativity accounting to pass unnoticed, and those making such accusations have failed to make a case.
What is clear also is that the nature of the Guyanese economy is shifting, with less reliance on sugar and far greater importance now being attached to the service sector and to government spending.
The real sectors are important, and a close eye has to be kept on these sectors to avoid the inconsistent performance that has characterized certain industries. Gold prices are driving production up, but it is also most likely leading to a decline in forestry production, as more and more persons take to mining instead of logging.
This is something that our economic planners need to look closely at. The expansion will invariably cause a reduction in private logging and the production shortfall is going to hurt the forestry sector. As such, incentives need to be created to ensure that as gold mining increases on the back of high gold prices, compensatory mechanisms are in place to boost forestry output.
It is also clear from the GDP numbers that government spending continues to play a pivotal role in boosting economic growth, and the government is not short of resources to pump into the economy, which means that even if some sectors underperform, growth is still guaranteed once public spending remains high.
The excuse of high fuel costs contributing to the decline in fisheries output needs also to be considered. The real reason could be the over-fishing of our fishing grounds, and this may be something that the economic planners may wish to also examine, even as the government gloats over rice, which continues to do well as a result of the huge investment in drainage and irrigation.
The economy is therefore in good shape and the benefits are filtering down to everyone. This is reflected in the growth in retail sales which is up by over 20%. With all that money coming out of the “gold bush”, the business community should not be complaining.
What is interesting, though, is that despite the spectacular growth in housing, property values remain prohibitively high and rents are not decreasing. Given the tens of thousands of house lots that are being distributed, it is to be expected that there would have been a steep decline in the values of properties or in the cost of rentals.
This should be of equal concern to the Minister of Finance, even as he tries to iron out some of the kinks in relation to the shortage of lumber on the domestic markets.
All of this, of course, has happened without the funds from Norway, and the government clearly now can make the point that even without those funds, the economy remains on a steady footing.
Hopefully with favourable weather; with the Barama boiler back on stream; with the Skeldon factory expected to get rolling soon, once the right incentives are offered to workers, it can be a fantastic year for the Guyanese economy. One should dispose of all those fears that somehow one good cycle is followed by a bad one.
Guyana has had a long run, and therefore the government must be doing something right because all around the world, economies are in problems.

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A FANTASTIC YEAR SO FAR!

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