The surging increases in food and fuel prices have produced considerable economic uncertainty worldwide.
This has been compounded by a credit crunch that is threatening to grow out of control. Already, several financial institutions in the USA and Europe have collapsed and many more are seriously threatened.
Furthermore, every major economic region has been forecasting economic slowdown or worse, recession, for the period at least until the end of 2009.
In the midst of this disturbing sequence of events, there is now a growing concern that the inflation in food and fuel prices will spill over to other areas of the economy as increases in food and energy costs continue to insinuate their way into other economic transactions. Some experts are forecasting a more general inflationary rise in the price level over the near term. In the face of such global uncertainty what are the near-term prospects for the Guyanese economy?
In order to give a sensible response to this question I shall introduce readers to a number of considerations that should be taken into account. The main difficulty I face in framing my response however, is the absence of official timely statistics on the performance of the economy.
No quarterly national accounts
More than four decades into Independence and Guyana still does not publish on a timely basis, in a quarterly format, the most basic and elementary statistical dataset on economic structure and performance.
This dataset is the United Nations National Accounts System, published quarterly. Thus, quarterly data on private consumer expenditure, government expenditure, investment expenditure, savings, export earnings and import expenditure are not publicly available for any period in 2008, after eight months of the year have passed. As these data segments make up the system of national accounts we consequently have no quarterly data on real GDP growth for purposes of comparison with performances of other economies at the global and regional levels. This is a major data omission, which the country needs to correct.
It has been suggested that the neglect in publishing these most basic and routine quarterly economic data, which are available for several Caricom economies, is deliberate. Cynics see this as continuation of the more general pattern of secrecy and information hoarding that first came into force under the authoritarian PNC regime during the late 1970s and 1980s.
We know now, by public admission, that the surveillance reports and economic assessments produced by the international agencies (often using their own estimates when the data are not officially provided) cannot be made publicly available by them, because official permission to do so has been refused.
There are two problems, however, which derive from this situation. First, when data are in fact published, the public treats these with skepticism. This perception debases the currency of public information on the economy, making even the little that is available worthless, in the eyes of consumers, workers, the business community and other users.
The second problem is that so great is the need for such data that persons, firms and organisations are constantly seeking these from other sources. Unfortunately, however, there is no true substitute for the official publication of basic economic statistics. When these are produced by non-official sources, they too often lack credibility in the eyes of the users.
Taking into account this lack of timely information, one is nevertheless confronted with various public authorities proclaiming how well the economy is doing and stating definitively that it is on course to producing a better performance than that of last year. Some cynics say that these pronouncements are designed to “guide” the statistical results, as they put enormous pressure on technicians to come up with data supporting their pronouncements.
A case in point is the consumer price index data (Georgetown). These have to be collected and tabulated on a monthly basis and the Bureau of Statistics monitors prices of a basket of items in various retail markets for this purpose. For decades now this has been one set of data which has been released regularly. In recent years the dissemination of this data seems to have declined, but it has since been revived. Current data from the Bureau of Statistics show that retail prices have increased by only 5.8 per cent for the first half of the year. No one I know gives credibility to this, particularly for important sub-items of food consumption (milk) and transportation, because of their experiences with the new higher fares and gasoline prices.
A tale of falling prices
This brings up the first observation I wish to make. Despite the global and regional trend towards rising price levels, Guyana’s official statistical publications are indicating a decline in the price level. Remarkably, the data claim that for the second quarter of this year the overall price level of consumer items recorded an increase of only one per cent (1%).
It is claimed that this remarkable achievement is due largely to a fall in the prices of fruits and vegetables.
Fruit prices are supposed to have declined by just over 6 per cent during the second quarter of this year (April–June, 2008) substantially reversing the nearly 11 per cent increase in the first quarter (January–March, 2008).
Vegetable prices are supposed to have fallen by over 6 per cent in the month of April, nearly 10 per cent in May, and then a slight increase of just over one per cent (1.2%) in June. For the second quarter therefore the overall decline was about 10 per cent (9.5%).
Contrary to public perception the data also show a fall in the price of milk and milk products of just under 1 per cent during the first quarter of this year and increased by nearly 4 per cent in the second quarter.
None of the experiences documented above sat well with the several persons whom I consulted on this and who shop regularly. Since there can be no trumping of the official data, one must conclude that Guyana, unlike so many other countries regionally and worldwide is blessed with the near-term prospect of no inflationary pressure. Prices are falling and the official prediction is that the inflationary rise in food prices seen last year, of 20 per cent is over.
As we shall see next week, other indicators of the near-term prospects of the Guyana economy are not so.
