Guyana is expected to end this year with an inflation rate of 3.3 per cent, a reduction from the 6.4 percent it recorded last year, a recent report from the International Monetary Fund (IMF) said.
According to the Regional Economic Outlook: Western Hemisphere (REO) report, which reflects developments as of October 1, 2009, Guyana is on course to experience an inflation rate of four per cent next year.
Based on the report, Guyana will see output growth of two per cent for this year and four per cent in 2010. Last year the country experienced output growth of three per cent.
The country’s External Current Account Balance as a per cent of the country’s Gross Domestic Product (GDP) is projected to be -19.1 per cent for this year and -21.3 per cent for next year. In 2008, the country recorded -21.5 per cent in this category.
In the fiscal indicators, the country’s Public Sector Revenue as a percentage of the GDP, for 2009 is projected to be 45.6 per cent, while for next year the projection is 45.2 per cent. In 2008, the country recorded 42. 4 per cent in this category.
In Public Sector Primary Expenditure as a percentage of the GDP, the projected figure for this year is 50.8 per cent while for next year it is expected to be 49 per cent. Last year Guyana recorded 48.4 percent.
For this year, Guyana is expected to record -8 per cent in the Public Sector Overall Balance, when expressed as a percentage of the country’s GDP. Guyana recorded -7.9 per cent in this category last year and is expected to record -6.6 per cent next year.
In the Public Sector Primary Balance expressed as a percentage of the GDP, the estimate for this year is -5.2 per cent, compared with the -3.8 per cent projected for next year and the -6 per cent reached last year.
The report pointed out that although Latin American and the Caribbean (LAC) countries were significantly affected by the global financial crisis, the worst is over for most of these countries. However, while the global economy is emerging from the recession, only a gradual recovery is anticipated, with modest growth in coming years.
The report said that “the crisis shocked the region with more expensive external financing and lower exports, workers’ remittances, and tourism receipts.” It further stated that “a wave of uncertainty dented confidence, and the private sector cut back spending. But following a sizable contraction through the first half of 2009, the LAC region is recovering and moderate growth is expected for 2010.”
The report noted that the LAC region’s performance during this crisis is considerably stronger than that of other emerging markets. The predicted growth forecast for the LAC region for this year is -2.6 per cent. However, for next year the overall growth for the region is expected to undergo a recovery and reach to slightly below three per cent. “Within the LAC region, we expect the fastest recovery in commodity exporting countries, with a median growth of about 3.5 per cent,” the report said.
The document noted that although the global economy is emerging from recession, only a gradual recovery is anticipated with modest growth in coming years. “Financial stabilization has greatly reduced the possibility of a systemic collapse, though there are still downside risks.”
“Growth in the United States and most advanced economies will remain sluggish, and employment conditions will likely get worse before they start to improve.” The report stated that “a permanent loss in potential output, weak private consumption, and much higher debt levels in the United States will be negative legacies of the crisis that could adversely affect the LAC region.”
The report noted that recovery prospects are stronger for countries that had the most room for policy manoeuvre, which are also benefiting in 2009 from much improved financial conditions and commodity export prices. Countries more reliant on tourism and remittances were not hit as forcefully on impact, but their recovery will be slower because their outlook depends significantly on lagging employment and consumption in the United States. Some of these countries also have less room for policy stimulus.
With regard to plotting the way forward, the report stated that “policies will have to strike difficult balances, according to country circumstances.” It noted that for better-prepared countries, which were able to apply monetary and fiscal stimulus, the main issue will be when to begin, and how fast to proceed with, the withdrawal of stimulus. However, the report noted that there are risks associated with removing stimulus too quickly, given that the global recovery is still not well entrenched. The report, however, noted that there were also risks to withdrawing the stimulus too slowly.
In a country of 750,000 people like Guyana that depends on loans, grants, remittances, and money laundering, I sometimes wonder what these decreased inflation numbers mean when we look at the hard facts on the ground in which actual ordinary people are still worse off today compared with last year. It’s like there was a flood in the city and the waters were 6 inches last year, but this year the level is down to 3 inches. Shoots, man, there is still a flood. D-uh!
You are in draemland my friend…
Maybe another planet..
6:09 am
yyyyyyyyyyaaaaaaaaarrrrrrrrrrrrrrrnnnnnnnnnnnnnnn
When will Guyana be able to present a budget that discounts and is independent of contributions from remittances? Remittances are unreliable as a source of revenue for the development of a country.
This is good, reassuring news for Guyanese at home and abroad. To record these positive numbers during a world economic and financial crisis is a remarkable achievement. The IMF report is a recognition of the prudent economic policies of the Jagdeo administration. A toast to the government with a glass of Jack Daniels or El Dorado would be in order today.
Y71, you believe those questionable numbers because you obviously are still being affected by the Jack Daniels or El Dorado you have been consuming in celebration of other questionable achievements.
In any case, many reputable economists pay very little attention to those IMF numbers because they are not true indicators of a nation’s standard of living or quality of life. Experience has shown that the reality is very different. Yes, those numbers very often represent growth without development.
With regard to the inflation numbers, ordinary Guyanese must be sucking their teeth in response to what they have to see as an utterly false representation of the punishing reality on the ground.
Y71, I’m not afraid to bet my last dime on the fact that a worker’s 2008 salary can in 2009 buy less than 80% of the goods it was able to buy in 2008.
Yes indeed, yasuman71 you are indeed encouraged to have a sup from the celebratory jar. It is always been my thought that Mr Jagdeo would make an excellent finance minister in the next PPP line-up and this low inflation figure helps to prove what I say.
… and as usual blogger Cummins makes a ’sobering’ assessment of the actual state of play later on on this thread however one must always be aware also that violent crime is always going to be a brake on Guyana’s development especially when there are so many naysayers. Cheers.
ARE THESE NUMBERS CORRECT? HARD TO BELIEVE FROM WHAT I SEE EVERY SINGLE TIME I GO HOME. JAGEDO INTRODUCED VAT TAX WHICH IS 16% (TWICE WHAT IS CHARGED IN THE US AND OTHER COUNTRIES). MOST PEOPLE CANNOT AFFORD TO PROPERLY SUPPORT THEMSELVES; I SHIVER TO THINK WHAT IS GOING TO HAPPEN WHEN THE SOURCE OF THEIR US AND CANADIAN SUBSIDY CAN NO LONGER SEND THAT MONEY. SO MANY ARE GETTING MARRIED AND HAVE TO LIVING WITH PARENTS SINCE RENT CONTINUES TO ESCALATE, OTHERS HAVE TO SHARE A SMALL HOUSE ALONG WITH THE OTHER MONTHLY EXPENSES IN ORDER TO MAKE ENDS MEET SINCE NOT EVERY PERSON GETS HELP FROM ANYONE OUTSIDE OF GUYANA. AND IT CONTINUES, SO HOW COME IT IS ONLY 3.3%? I SOMETIMES WONDER.
Keep those belts tighten and prepare for the bumpy ride ahead.
From 6% to 3.3% it’s still and inflation.
It is good that inflation is back to single digits from the 2007 high. Well done to the Bank of Guyana for managing the macroeconomic affairs well. The BOG has kept its part of the bargain. The government has not! Office of the President has not! Low inflation along with output stagnation, low job creation, and a backward production structure are not entirely helpful to the poor masses. In other words, you can have a stable donkey cart economy from an inflation standpoint.
In the US that’s low inflation, not in Guyana,3.3 is still very high inflation when you consider the national average wages are around 50,000 GYDs around 250 USDs, now compare wages with cost of commodities, “which are the cheap or counterfeit stuff”. IMF calculate in USDs, guyana is not the US, so it cant be like for like calculation.
These numbers are significant in that it goes against what the “doomsayers” have been saying. The country continues to make positive strides. There is however alot of room for improvement.