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Nigel Hughes’ claims of Dutch Disease demand evidence

Jan 25, 2025 Letters

Dear Editor,

Nigel Hughes’ recent claims that Guyana is at risk of falling victim to Dutch Disease raise important questions about his understanding of the term and the reality of Guyana’s economy. Dutch Disease, at its core, describes a situation where the rapid growth of a resource-based sector, such as oil, leads to the stagnation of other areas of the economy—particularly manufacturing and agriculture—resulting in over-reliance on resource revenues. This economic phenomenon often manifests through an appreciating currency that hampers export competitiveness. However, the evidence clearly shows that Guyana is avoiding this economic trap.

Analysis of the 2024 Mid-Year Report and the 2025 Budget Speech reveals that Guyana’s non-oil economy grew healthily. Appendix A1 in the 2024 Mid-Year Report pegs 2023 growth for the agriculture, fishing and forestry sectors as expanding by 6.9%. Likewise, the manufacturing sector expanded by 29.3%, while the services sector grew by 10.9%. Overall, the non-oil GDP growth rate for 2023 was 12.3%.

The 2025 Budget Speech provides further evidence of the economy’s diversification in 2024. The agriculture, fishing, and forestry sector grew by 11%, with rice production increasing by 9.3% to 725,282 metric tonnes. Corn and soya production surged by 154.8% and 129.2%, respectively, while livestock production rose by 24.6%. Additionally, the bauxite industry rebounded with a 48.4% increase to 1.7 million metric tonnes, reversing years of decline under the PNCR/AFC administration. The manufacturing sector is estimated to have expanded by 13.5%. Overall, the non-oil GDP growth rate for 2024 was 13.1%.

Mr Hughes’ claims of Dutch Disease demand evidence. The data shows an economy experiencing broad-based growth, with agriculture, manufacturing, services, and even bauxite mining thriving alongside the oil industry. If Mr Hughes believes otherwise, where is his evidence? What specific data or trends suggest that Guyana’s economy is stagnating or over-reliant on oil?

Further, Mr. Hughes would do well to explain how consultation with the Opposition—whose track record on economic management is far from stellar—would improve these outcomes. Would the AFC recommend cutting investments in agriculture that are revitalizing rural livelihoods? Or would they reduce allocations for private sector-led construction and services that are connecting communities and driving economic activity? Moreover, Mr. Hughes should clarify what his solution to Dutch Disease entails. Does he suggest halting oil production and forfeiting the revenues that are funding this transformative growth? Does he propose abandoning the gas-to-energy project that will slash electricity costs for households and businesses?

These are not rhetorical questions but genuine ones that require answers. If Mr. Hughes believes his critique is valid, he must engage with the data and provide evidence for his claims. Otherwise, his warnings about Dutch Disease amount to little more than political posturing.

The truth is Guyana is navigating its resource boom with vision and strategy, ensuring that all sectors of the economy benefit and that no one is left behind. The thriving non-oil economy, as evidenced in the 2024 Mid-Year Report and the 2025 Budget Speech, reflects sound policies and a forward-looking approach to development.

Mr. Hughes’ remarks, unfortunately, fail to engage with the reality of the situation. The data is unequivocal: Guyana is thriving because of balanced growth, prudent economic management, and transformative investments in areas like housing, which are creating wealth and improving lives.

If Mr. Hughes believes otherwise, let him provide the evidence and explain which data points to Dutch Disease and why.

Sincerely,

Alfonso De Armas

(Nigel Hughes’ claims of Dutch Disease demand evidence)

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