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Govt.’s Mid-Year Report confirms presence of Dutch disease in Guyana
…as oil sector accounts for 54.9 percent of total GDP – Opposition
By Davina Bagot
Kaieteur News – With significant declines in the non-oil economy, reported by the government in its Half-Year Report, the A Partnership for National Unity + Alliance For Change (APNU + AFC) Opposition believes the presence of the Dutch disease has been confirmed in Guyana.
Opposition member, Elson Low addressing the media on Tuesday
During its weekly press conference on Tuesday, the Opposition’s spokesperson on Economics, Elson Low said the document highlights “early signs of the Dutch disease, as indicated by the fall in sugar, rice, fish and gold production, as well as a reduction in manufacturing output. What this means is the non-oil sectors are not performing.”
In the Half-Year Report, the government recorded a 55.9 percent decline in the production of sugar, an 11.8 percent decline in fish production and a 26.4 percent reduction in shrimp production.
Rice production in the first six months of the year also dropped by 22.4 percent, while a 1.5 percent contraction was recorded in the gold mining sector. The manufacturing sector is also estimated to have contracted by 11.4 percent in the first half of the year.
On the other hand, it is estimated that the oil and gas subsector expanded by a whopping 73.5 percent when compared with the first half of 2021. Despite this, the administration believes that the non-oil economy was estimated to have grown by 8.3 percent.
To this end, Low noted, “we need as a nation to ensure that we have a diversified economic base so that if, heaven forbid, there is another oil price shock…we do not see (the) nation’s revenue dry up and then the other industries that have been neglected, we don’t have revenues from those industries to shore up the government’s budget and the overall economic performance of the country.”
The Economist noted that the decline in performance of Guyana’s major traditional sectors is alarming and requires attention.
The Dutch disease is a concept that describes an economic phenomenon where the rapid development of one sector of the economy (particularly natural resources like oil) leads to a decline in growth of other sectors.
Oil drives first half GDP growth
The Ministry of Finance 2022 Half- Year Report presented a table in which it highlighted that the agriculture, fishing and forestry sector contributed 11.8 percent to the country’s Gross Domestic Product (GDP), down from its 25 percent contribution in 2019 at half year.
More worrying is that sugar’s effect on the half year GDP was only 0.1 percent this year, while in 2019 it was 0.4 percent. At half year, the manufacturing sector accounted for 2.3 percent of the country’s total GDP, while at the same period in 2019, it contributed 5.2 percent of the country’s growth.
The services sector also recorded a decline in performance at mid-year 2022, contributing only 19 percent to the GDP rate, while in 2019, it accounted for 42.3 percent of the country’s growth.
Notably, the only subsector that outperformed its production over the last four years was the mining and quarrying sector. At mid-year, this sector contributed 59.9 percent of Guyana’s total GDP, when in 2019 the sector barely contributed 14.3 percent to this tally. Moreover, it is the petroleum and gas and support services that accounted for 54.9 percent alone of the total GDP.
The Ministry of Finance Half-Year Report shows the various sectors’ contribution to GDP
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