Economy grew 2.8%
- mid-year review
Minister of Finance Dr Ashni Singh yesterday announced that Guyana’s economy grew by 2.8 per cent in the first half of 2012 with non-sugar GDP expanding to 6.2 per cent for the same period and an overall projection of growth for the year being 3.8 per cent.
Inflation for the first half of 2012 was 1.8 per cent, within what the minister referred to as acceptable norms. The report said that the end-of-year target of 4.6 per cent is still maintained, notwithstanding the moderate price movement observed in the first half of the year. While the government also collected more VAT than this time last year, excise tax collections declined, the report revealed.
Speaking at a press conference on the 2012 mid-year review held in the studio of the National Communications Network (NCN) yesterday, the minister said that total export earnings grew by 9.2 per cent to US$592.1 million. He said that for the first half of the year, gold production grew by 13.2 per cent to 184,929 ounces and export earnings amounted to US$268 million, an increase of 16.8 per cent over the corresponding period in 2011.
Over the first six months of 2012, the bauxite sector grew by 41.9 per cent and export earnings amounted to US$79.4 million, an increase of 21.8 per cent over the corresponding period last year. The minister said that it remains to be seen how much the protests and road closures in Linden would have affected the industry. “We have worked hard to attract investment in the bauxite industry,” he added.
Rice production expanded by 1.4 per cent to 210,395 tonnes and export earnings amounted to US$84.6 million.
For the first half of the year, the fisheries industry expanded by 13.8 per cent.
Interest rates trended downward during this period and private sector credit expanded by 8 per cent to $145.3 billion. Foreign Direct Investment amounted to US$167.2 million in the first half of the year.
The report said that through the first half of 2012, the economy continued along a growth path that reflects progress in economic diversification, and reducing vulnerability to external and other shocks, including by ensuring fiscal space to buffer against adverse developments.
“These gains notwithstanding, we remain ever mindful of the uncertainty of the global environment and our unavoidable exposure to this environment as a small and still vulnerable economy, the minister said. “We also remain ever mindful of how critical it is to maintain a domestic environment that is conducive to investment and attractive to investors, and as a government we are firmly committed so to do,” he said.
He said that at the end of this year’s first crop, sugar production was 71,147 tonnes, a decrease of 33.4 per cent compared to that of 2011. He noted that the decline has been mainly due to the effects of industrial relations disruptions “in addition to inclement weather that continue to plague the industry.
“In light of this performance at the half year, the annual production target has been revised to 240,000 tonnes and the growth rate to 1.5 per cent.”
Following a 5.8 per cent growth in 2011, the livestock industry is projected to grow by 4.9 per cent at the end of 2012. “At the end of the first half, the industry grew by 12.8 per cent, but given some subsequent moderation in beef, pork and mutton production, the projected growth rate for 2012 is now revised to 2 per cent,” he said.
The report said that the other crops industry faced some challenges in the first half of the year and prices for fruits and vegetables fluctuated during the observation period due to unpredicted weather conditions which resulted in some flooding and occasional shortages in the market. “Notwithstanding this, compared to the first half of 2011 both the production of some commodities and exports of vegetables and fruits show an increase for the first half of 2012. Based on this performance the mid-year growth is estimated at 2 per cent and end-of-year projection remains at 4 per cent,” it said.
The forestry sector experienced a decline in production of logs by 19 per cent while sawn wood increased by 8.6 per cent. “The smallest category, round wood, saw a 58.6 per cent increase in harvest. The two latter categories are also slightly ahead of their projected output while logs are lagging behind. The resulting mid-year growth rate was a decline of 10.3 per cent and the annual growth rate is being revised downwards to contract by 10.3 per cent,” the report said.
VAT & Excise Tax
The report said that government revenue for the first half of 2012 amounted to $64.9 billion, a 5.5 per cent increase over first half 2011, primarily as a result of improved performance across several tax revenue categories.
Collections of value added tax (VAT) for the period under review rose by $1.4 billion, amounting to $16.1 billion. Excise tax collections for the period amounted to $11 billion, a decline of $93.4 million compared to the corresponding period of 2011. This, the report primarily attributed to a $1.9 billion decrease in collections from petroleum products due to comparably lower excise tax rates. “On the other hand, excise tax collections from motor vehicles amounted to $5.2 billion, an increase of $1.5 billion reflecting higher levels of vehicle imports,” the report said.
“Tax revenue collections for the period amounted to $58.6 billion, representing 90.4 per cent of total current revenue collections or 2.9 per cent over 2011. Internal revenue collections amounted to $25.9 billion compared to $26.5 billion in 2011. This is attributed to contractions of $582.2 million and $146.6 million in private and public sector corporation taxes respectively associated with comparably lower company tax rates. In addition, withholding tax collections decreased by $624.8 million compared to first half 2011 due to arrears in dividend payments made in 2011 by a local company to its overseas parent company,” the report said.
Customs and trade tax collections totalled $5.7 billion for the first half year, representing a 19.6 per cent or $930.9 million increase over 2011 half year collections mainly attributed to a $900.6 million increase from import duties due to higher level of imports of most categories of goods particularly intermediate goods.