Gross Domestic Product (GDP) growth this year has been 2.6% compared to the originally projected 4.4% following a downswing in key sectors, Finance Minister Winston Jordan said while delivering the $250 billion 2017 budget yesterday in the National Assembly.
The GDP growth projection next year is 3.8% on the back of mining and quarrying and an expected recovery in other sectors.
Delivering his third budget presentation, Jordan said that at the middle of this year, real economic growth was 2 per cent but since several industries and sectors including sugar, rice, construction, and the wholesale and retail trade, were “showing signs of distress”, the rate of growth was revised downwards to 4 per cent. Thereafter, several unexpected developments arose including the downsizing of Barama Company Limited and Demerara Timbers Limited’s operations in the forestry sector. Jordan also cited structural changes, ongoing strikes in the sugar industry and the slow pace of implementation of the Public Sector Investment Programme for a reduction of the real growth rate in 2016 to 2.6 per cent.
Except for fishing and other crops there was a dismal performance in the agricultural sector. Jordan said that despite an encouraging recovery in 2015, sugar output is projected to slide by 18.7 per cent, to reach 188,000 metric tonnes this year. The low production was attributed to the El Niño dry spell experienced earlier in the year which resulted in lower yields, combined with late planting and strikes during the second half of the year.
As a result of continued uncertainty in the rice industry, the Finance Minister said that output is expected to reach 600,000 metric tonnes in 2016, a drop of 12.8 per cent from the total achieved in 2015. He blamed El Niño again and the loss of the lucrative Venezuelan market.
Nevertheless, he said that the Government is encouraging both farmers and millers to move towards more value-added products. In this regard, during 2016, 300 acres of aromatic rice were sown for the first crop and over 3,000 acres for the second crop, compared to less than 100 acres planted for both crops during 2015. Two millers are actively engaged in this venture and have already secured markets, in the US, he disclosed.
The livestock sector is expected to shrink by 5.1 per cent this year. Jordan said that the gains made in poultry production are projected to be undercut by a fall in milk production by 19 per cent. This fall in milk production is due to reduced demand, prompting farmers to take their animals out of lactation. However, Jordan said that the establishment of two abattoirs in Regions 5 and 9, along with improved breeding stock and better husbandry practices, are expected to boost growth in this sector.
Forestry is also expected to slump by 33.3 per cent mainly as a result of Barama halting the production of logs and the UK’s restriction on greenheart logs from here.
Fishing and other crops performed creditably, with growth recorded at 11.8 per cent and 2.5 per cent, respectively. Jordan said that growth in the fisheries sector is expected to be supplemented by the introduction of deep float pelagic tuna production.
Mining and quarrying
The mining and quarrying sector is slated to grow by 35.7 per cent in 2016, the highest in over a decade. Jordan said that gold production is expected to reach 644,814 ounces as a result of the combined efforts of small and medium-sized miners “responding to the generous concessions granted by Government and rising global gold prices, and the two foreign-owned companies reaching full capacity”. Jordan said that the bauxite industry is expected to expand by 9.6 per cent, while the other mining and quarrying sector is projected to jump by 22 per cent, mainly due to a whopping 92.5 per cent hike in sand production and a 9.2 per cent increase in stone output.
Manufacturing is projected to fall by 7.1 per cent this year, as a result of the dismal performances in sugar and rice, as well as a small decline in other manufacturing.
Construction also declined from a budgeted 10.5 per cent to a projected 3.2 per cent in 2016. This is related to a decline in activity in the housing sector and the Public Sector Investment Programme.
Jordan said that next year the agriculture, fishing, and forestry sector is projected to expand by 4.2 per cent in 2017. Sugar production is expected to rise by 10.6 per cent, partly as a result of the assumption that El Niño weather conditions would not recur along with consolidation measures and improved field and factory conditions at some estates.
He said however that no growth is expected in rice production but the forestry sub-sector is expected to rise by 5.8 per cent, due to the restructured allocation of concessions given up by Barama and the resumption of operations by a major operator.
The mining and quarrying sector is expected to rise by 7.9 per cent as a result of continued strong performances in the gold, bauxite, and quarrying industries. Gold output is targeted at 694,000 ounces, while that for bauxite is estimated at 1,726,008 metric tonnes.
The manufacturing sector is expected to grow by 1.9 per cent, with light manufacturing set to appreciate by 1.2 per cent. The importance of “buying local” cannot be over-emphasized, Jordan stated.
The construction sector is expected to expand by 5 per cent, an improvement over the 2016 performance.