In the first half of this year, the country achieved real economic growth of 5.9%, according to the Mid-Year Report tabled by Minister of Finance, Dr. Ashni Singh in the National Assembly yesterday.
“Underlying this overall expansion in real gross domestic product in the first half was growth in the non-sugar sectors of 5% while the sugar sector also contributed to the overall acceleration in growth,” the report said. As a result of this performance, and given updated outlooks for the various productive sectors, the economy is now projected to grow by 5.1% in 2011 with non-sugar growth projected at 3.4%, an upward revision from the original projections of 4.6% and 2.8% respectively at the time of Budget 2011.
It was noted that as a result of final production data for the last months of 2010 becoming available subsequent to the Budget 2011 presentation, real growth for 2010 is now measured at 4.4% with non-sugar growth measured at 5.1%.
For the first half this year, export earnings expanded by 34.6% to US$533.1M reflecting stronger output performance in the commodity producing sectors of the economy along with improvement in world market prices for most export commodities, the report said.
According to the report, in the first half of 2011, the sugar industry showed tentative signs “that the path to recovery has commenced.” It said that the first crop returned 106 871 tonnes of sugar reflecting a 30.5% increase over the first crop of 2010 and the best first crop performance since 2004. “The industry continues to emphasize that if workers maximize the opportunity days available for harvesting for the second crop, the annual target of 298 879 tonnes is achievable,” the report said while adding that recent agreements concluded with the industry’s labour unions on wages and salaries for 2011 are likely to be helpful in this regard. The sector’s projected growth for the full year remains unrevised at 35.3%.
For the first half, the report said, export earnings from sugar increased 32.4% to US$50.1M reflecting a 30.4% increase in quantity shipped to 99 738 tonnes and some improvement in prices due to world market conditions.
With regards to rice, the report said that the first crop brought in 207, 514 tonnes of rice which was 23.3% higher than the corresponding period in 2010 and “the highest first crop in the industry’s history.” This growth in production was attributed mainly to significantly improved drainage and irrigation as a result of government investments, the development of a new and more tolerant rice strain by the Guyana Rice Development Board, higher yields, and a higher acreage of paddy planted with favourable international prices serving as an increased catalyst to plant more. “The industry at this point in time foresees no impediment to its attaining the second crop target which, when taken together with the stronger first crop production, results in an upward revision of projected growth in the industry from 4.9% to 12%,” the report said. Rice earnings for the first half, expanded by 35.1% to US$92.6M mainly attributed to a 26.4% increase in average export prices coupled with an increase in export volume.
The other crops sector in the first half of the year recorded a 3% growth rate. Weather conditions are expected to be more favourable in the latter part of the year, which augurs well for production and there is no revision of the projection of 2% growth, the report said. It also noted that production in the livestock industry increased by 2.7% with increased production evident in the areas of poultry meat, table eggs, mutton and beef while pork production declined. Production in the sector was targeted to remain stable for this year but with the growth seen, growth for the year is envisaged at 0.6%.
In contrast, the fisheries industry recorded negative growth of 2.2% with a contributory factor being high fuel prices. The industry is now projected to contract by 4.7% in the full year.
In the forestry sector, during the first half of the year, production of logs, lumber and roundwood all contracted resulting in an overall negative growth in the industry of 30.3%. “Notwithstanding the resumed production of plywood manufacturing operations, sustained international demand for several of Guyana’s traditional species now boosted by the penetration of Guyana’s lesser used species into the international market and attendant improvement in international market prices, the sector is now projected to contract by 19.9% by year end compared to an earlier projected contraction of 1.4%,” the report said. Timber exports amounted to US$18.2M – a decline of 25.7% due to a decline in export volume.
Meantime, in the mining and quarrying sectors, production of bauxite rose to 815,505 tonnes in the first half of the year, an increase of 38.6% compared to the same period last year. The expected growth rate for value added in the bauxite industry is now projected at 13.4%.
Gold production in the first half of 2011 was 163,413 ounces, an increase of 14.9% over the corresponding period last year. With high gold prices, there is every incentive to invest and operate in the industry, the report said. Average export prices for the precious metal witnessed a 29.1% increase contributing to a 54.4% increase in export earnings to US$229.5M in the first half of the year. The first half of 2011 saw better conditions in terms of less adverse rainfall. Gold production for the year is now projected to reach 320,000 ounces resulting in an upward revision in the industry’s projected growth from 2.9% to 3.7%,” the report said.
Mainly due to the continued weakening in the diamonds industry, the other mining sub-sector has shown an 18.6% decline in production for the first half of the year. Diamond production dropped 33.2% in the first half to 23 620 metric carats compared to the same period last year. Sand production grew while there was a decline in the production of stone.
“The combined effect is a recorded mining and quarrying sector growth of 9.5% for the half year, and a revision of the sector’s overall growth projection from 2.8% to 1.7% for the full year,” the report said.
It also said that the manufacturing sector grew by 10.6% at the half year driven largely by the manufacturing component in sugar and rice production but with other manufacturing also estimated to have grown by 2.3%. “Particularly given the improved expectations for rice, and given that other manufacturing activities are expected at minimum to realize their budgeted growth performances by the end of the year, the annual growth target for the sector has been revised upwards from the budgeted 7.7% to a now expected 9.4%,” the report said.
In the services sector, there has been growth in the electricity and water sectors, engineering and construction activity also expanded.
There was robust growth of 21.7% in the wholesale and retail sector for the first half and the projected growth of 4.4% has now been revised upwards to 11% for the year.
The transportation and storage sector declined 6.5% in the first half while the information and communication sector saw growth of 5.5%. The finance and insurance industry and the education, health and social services recorded growth of 16%, 3% and 3.4% respectively for the first half of the year.
Foreign direct investment increased by 9.2% in the first half of 2011 driven principally by the upsurge in activity in the mining and telecommunications sectors and enabling the capital account to record a surplus of US163.8M compared to US$165.4M in the corresponding period last year.
In terms of balance of payments, at the end of the first half of 2011, this reflected a “modest” deficit of US$19.6M, the report said. “This was primarily attributed to developments in the current account, particularly higher imports driven by escalating world market fuel prices, along with higher imports of capital goods mainly in the industrial, agricultural and mining sectors. This outweighed the combined increase in exports associated with higher volumes shipped and stronger world market prices for key commodities and higher transfers,” the report said.
Budget 2011 had projected to end the year with a balance of payments surplus of US$24.4M but the projection is now to end the year with an overall deficit of US$36.1M.
Collections from Valued added and excise taxes during the first half of 2011 increased by 10.7% to $25.7B. Of this amount, VAT collections totalled $14.6B reflecting increased imports and domestic trading activity.
Meantime, at the end of June 2011, Guyana’s total external debt amounted to US$1110.9M compared to US$1042.7M at the end of December 2010.
The inflation projection for the end of the year is revised to 4.8%.