Dear Editor,
The Stabroek Business editorial on Friday, June 25, 2010 entitled ‘Serious charges: The Economist Intelligence Unit (EIU) Country Report on Guyana’ and it front page story which reported the EIU as saying that the official 2009 growth figures were overstated are not only highly questionable but also bring into disrepute the dissemination of data by the international multilateral agency. Further, the empirical data certainly do not support the spurious contention by the EIU and Business Page.
EIU argued that based on their estimation Economic Growth was negative (0.9) in 2009, this is highly unlikely based on the calculation and estimation on a year on year basis. Sugar production was 233,736 tonnes, an increase of 7,469 or 3.3% over 2008. Rice production was 359,789 tonnes, a 9.2% increase over the previous year. Agriculture is a key component in real GDP growth with sugar representing 21% and rice 12% of shares in the sector output respectively.
The mining sector also saw a positive outturn with gold that represented 86% of that sector increasing by 14.7 percent with output surpassing the 300,000 ozs mark. This correlates with the record price that was at its highest US$1200 in 2009.
Indeed sugar was affected by poor weather patterns and strikes especially by the field workers in the first half which does not mean that cane on the ground cannot be harvested later even though it has implications for the ratoon cycle. While EIU seemed to buttress its arguments based on low output in the first half historically the second crop has in most cases been the bigger crop in both rice and sugar. The EU-ACP preferential price arrangement came to an end in October 2009. However, Guyana was able to sell its sugar at higher than the EU minimum guaranteed price due to a massive increase in the world market price for sugar and this is projected to be at that level over the next few years. The distribution sector grew by 6.6% in 2009. It is therefore really difficult to understand how an economy can record negative growth rate when all of its sectors recorded positive growth in that year.
It is difficult to manipulate production figures especially in the real sector that can be measured with accuracy and are easily verifiable. Moreover, the real GDP is also calculated using the income–expenditure flows in the Notional Income Accounts in value terms and its distortion has implications for the future.
The World Economic Outlook’s (WEO) recent publication of April 2009, the main source of global dissemination of economic data even attributes a higher growth figure for Guyana at 3.3% in 2009 which I believe that they have used the newly rebased GDP data for. EIU is absolutely wrong to argue that if confirmed meaning 2009 GDP growth “Guyana will be one of the only countries in the hemisphere to record economic growth last year”, the Dominican Republic, Bolivia, and Peru just to name some, all recorded positive growth in 2009. If EIU and Stabroek Business followed the debate in the hemisphere on economic performance full credit has been given to the Latin American countries on their resilience despite the global financial crises. The Statistical Bureau is the official agency charged with dissemination on authentic real sector data in Guyana and they have committed to the General Data Dissemination System (GDDS).
I will not get into debate on the private sector at this time however their behaviour has not changed much from when the consumption tax was introduced in 1989 in the meantime Britain has increased its value added tax to 20%.
Finally, let me state that a return to positive growth is a welcome development but the growth has to be sustained at higher level for a brighter future.
Yours faithfully,
Rajendra Rampersaud
