Economy grew by 36.4% at mid-year – Govt.

Sep 05, 2022 News

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…Sugar declined by 55.9%
…Fisheries sector down by 19%
…Rice contracted by 22.4%
…Gold declarations fell by 1.5%
…Manufacturing sector down by 11.4 %

By Davina Bagot

Kaieteur News – Against the background of severe decline in several key sectors, the Ministry of Finance said in its Mid-Year Report that Guyana’s economy grew by an estimated 36.4 percent- mainly on the back of the nascent oil and gas sector as well as some successes in the services and other crops sectors.

The document- released on Saturday also revealed that several other key sectors of the economy contracted, with sugar for example dropping back by over 50 percent when compared with the same period in 2021, but the government report noted that the non-oil economy was estimated to have grown by 8.3 percent. Moreover, it predicts an overall GDP growth of 56 percent this year with non-oil growth reaching 9.6 percent by yearend.

Sugar production

The Ministry of Finance report explains that the sugar industry is estimated to have contracted by a whopping 55.9 percent with the Guyana Sugar Corporation (GuySuCo) producing only 13,089 tonnes of sugar in its first crop of 2022. The production decline, the government said, was as a result of the “continued fallout” from the 2021 floods as well as changes in the weather, mechanical issues and labour challenges plaguing the operational estates. In light of the poor performance, the report stated that sugar will contract by 29.5 percent this year. It must be noted that it was only in August that a $3.4 billion supplementary budget was approved for the ailing sugar sector, which added to the $6 billion it received earlier in the year when the 2022 Budget was approved.

Fisheries sector

Despite efforts to revive the fisheries sector, the industry is estimated to have contracted by 19 percent in the first half of the year, as a result of “lower marine production” the report said. It was pointed out that fish production fell by 11.8 percent and shrimp by 26.4 percent when compared with the same period in 2021. Government was keen to note, “These declines outweighed the 444.1 percent increase in aquaculture production, which was driven by increased brackish water shrimp production. Notably, Government’s investment in aquaculture infrastructure, and drainage and irrigation systems yielded an almost 300 percent increase in the production of brackish water shrimp in the first half of the year. This, however, was not sufficient to increase overall value added from the industry.” Given this sector’s performance in the first half of the year, the Finance Ministry estimates that the industry can contract by 29.8 percent this year.

Rice

Rice production in the first six months of the year also dropped by 22.4 percent, with total production reaching 290,780 tonnes. Again, the Finance Ministry explained that this contraction was as a result of the continued 2021 flood impacts. “It was reported that farmers could not re-plant their lands due to bad land conditions resulting from excessive rain in December 2021. As a result, the 2022 production target has been revised to 615,486 tonnes, and the industry is now anticipated to grow at 7.8 percent this year,” the report said.

Gold

Lower declarations from small and medium scale miners also accounted for a 1.5 percent decline in the gold mining industry during the first half of the year. The report says that total declarations amounted to 236,728 ounces at the end of June, compared with 240,318 ounces last year. Additionally, it was noted that the small and medium scale operators output fell by 6.5 percent, to 188,956 ounces. According to the Mid-Year report, “This resulted mainly from lower declarations from dealerships, which declined by 9.9 percent year-on-year. On the positive side, declarations from the single producing foreign operator exceeded last year’s half-year output by 111.1 percent, to reach 47,772 ounces. Unfortunately, however, this was insufficient to offset the contraction from the small and medium scale operators.”  Nevertheless, the industry is now expected to grow by 7.4 percent this year.

Manufacturing

Owing to the declines in output from the sugar and rice industries, the manufacturing sector is estimated to have contracted by 11.4 percent in the first half of the year.

Oil

With the startup of the Liza Two operations in the Stabroek Block, it is estimated that the oil and gas subsector expanded by 73.5 percent when compared to the same period last year. In the first half of the year, 34.6 million barrels of oil were produced, compared with 20.2 million barrels during the same period in 2021. Given the success so far, government predicts that total oil production will reach 93.6 million barrels by year-end.

Non-oil growth

The Mid-Year Report pointed out growth in six sub-sectors, outside of the non-oil economy, including the other crops industry; livestock; services and construction; bauxite; forestry; other mining and quarrying industries. For instance, the report notes that the other crops subsector expanded by 27.7 percent in the first half of the year while the subsector’s growth projection has been upgraded to 17.9 percent for 2022.

The livestock industry is also estimated to have expanded, recording an estimated growth of 4.2 percent during the first half of the year. “The production of poultry meat, beef, pork and mutton grew by 9.2 percent, 6.9 percent, 18.2 percent and 28 percent, respectively. On the downside, the production of eggs and milk fell by 37.4 percent and 18.2 percent, respectively,” the report explains. The subsector is now projected to grow by 5.1 percent this year.

Estimated growth in the bauxite industry was pinned at 31.9 percent, with production at the end of June 2022 standing at 343,922 tonnes, compared with 291,560 tonnes in the first half of last year. In light of the growth recorded so far, government predicts a growth of 37.5 percent this year.

Meanwhile, the forestry sector is estimated to have expanded by 47.1 percent in the first half of 2022. According to the report, at the end of June, 203,220 cubic metres of timber products were produced, compared with 137,040 cubic metres at the end of June last year. The increase, the document said, was driven by “higher-than-anticipated production of logs”. However, with log production slowing as concessionaires’ quotas are used up, the expected growth rate for the sector is maintained at 13.5 percent for 2022.

A significant increase in the other mining and quarrying sector was recorded. During the first six months of the year, the sector is estimated to have grown by 36.3 percent. The Mid-Year document notes, “While quarry stone output is estimated to have fallen by 4 percent when compared with the same period last year, sand output, based on surveys, is estimated to have expanded by 19.8 percent, on account of increased demand from the construction industry.”

Additionally, it was explained that diamond declarations, like sand, also recorded significant improvement over last year, increasing from 18,432 metric carats in the first half of 2021, to 49,016 metric carats this year. Also boosting growth in the other mining sector is the production of manganese for the first time in decades.
At the end of the first half, 193,665 tonnes of manganese were produced, with a total of 378,000 tonnes expected by year-end. Given the notable improvements across the subsectors, the other mining and quarrying industries is now projected to grow by 11 percent this year.  Finally, it is estimated that services expanded by 7.6 percent in the first half of the year. Expansion in the sector was mainly driven by the wholesale and retail trade, and transport and storage industries, which grew by 17.2 percent and 13.6 percent, respectively, during the first half of the year. The document outlined that increased wholesale and retail trade activity was driven largely by the expansion in the construction industry and the corresponding growth in demand for building materials. Growth in the transport and storage sector was attributed mainly to increased demand for haulage and warehousing for the oil and gas sector. Services are now expected to grow by 6.3 percent this year.

 

 

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