The local economy has remained resilient amidst the COVID-19 pandemic and other challenges, recording yet another increase in economic growth, which was fuelled by mounting returns from the export of locally produced commodities and other positive sectoral performances.
Guyana’s positive economic performance was documented by the Ministry of Finance in its Mid-Year Report, which was released recently.
According to the report, the country, despite being faced with the economic spillovers of the COVID-19 pandemic and the effects of flooding from May to July, managed to record positive growth in the first half of 2021, driven by developments in both the oil and non-oil sectors of productive activity.
Testimony to Guyana’s positive economic performance is the country’s merchandise trade account, which improved as a result of export receipts expanding by 786.9M USD, outweighing the 46.2M USD increase in imports.
At the end of the first half of 2021, export earnings from crude oil amounted to 1.296 billion USD – or 64 per cent of total export earnings – compared with 438.4 million USD earned during the corresponding period last year.
This out-turn was attributed to both an increase in the volume and average export price of crude oil over the review period.
Responsible too for the overall increase in export earnings were returns from sugar which amounted to 10.7 million USD; this reflects an increase of 2.8 million USD when compared with the same period last year.
Further, export earnings from rice and paddy grew by 1.2 per cent at the end of the first half of the year, to 123.6 million USD. This was resulted from a higher average export price when compared with the first half of 2020.
In contrast, export earnings from gold, bauxite and timber fell by 86.4 million USD, 1.2 million USD, and 1.1 million USD, respectively.
Despite the performances of those industries, the country’s prospects remain positive, with the Inter-American Development Bank (IDB) reporting in its Caribbean quarterly bulletin, titled: “The fragile path to recovery,” that Guyana’s export earnings could increase significantly over the next four years, reaching 8 billion USD by 2024.
The IDB had said that exports will increase to 71 per cent of GDP in 2023 before declining to 59 per cent of GDP in 2026. This reflects in a significant increase when compared to the period 2010-2019, when exports represented approximately 36.1 per cent of GDP.
“Oil exports are driving this growth, which is estimated to increase from US$1 billion in 2020 to US$5.5 billion in 2024, pushing total exports up to US$8 billion,” the IDB reported.
Notably, however, although the projections are positive, imports at the end of the first half of this year still amounted to 1.211 billion USD, 46.2 million USD higher than what was recorded at the end of June 2020.
This resulted mainly from increased payments for fuel and lubricants and consumption goods, which outweighed the decline in import payments for capital goods.
With respect to consumption goods, year-on-year increases were observed across all subcategories, with other non-durables and food for final consumption contributing to over 47 per cent of the growth.
Although the statistics show that the economy is stable, the country is still grappling with the challenges of COVID-19, including the emergence of new variants which pose unanticipated threats that are even more severe than those faced previously.
“Significant progress has been made in securing and administering vaccines countrywide, thereby helping to reinforce resilience to the virus. Despite this, persistent vaccine hesitancy in some communities continues to threaten the timely achievement of herd immunity and forestalls the prospect of a full reopening of the economy.
“Additionally, Guyana’s acute vulnerability to climate change and to extreme weather events was severely illustrated by unprecedented flooding which left none of our ten Administrative Regions unscathed. During the first half of 2021,” the Ministry of Finance said in its Mid-Year Report.
The deluge resulted in a national disaster being declared and wreaked havoc across the productive sectors, particularly the agriculture sector.
The government responded with immediate action to support removal of the floodwaters from the land and repair damaged infrastructure.
Immediate response measures included the deployment of mobile pumps and heavy earth-moving equipment, distribution of food and medical hampers to households, and the setting up of emergency shelters where practicable.
Additionally, the Ministry of Agriculture led a nationwide compilation of data on the farmers and households affected, which has since informed a national flood-relief programme that is currently in implementation and will provide some $7.3 billion of direct cash transfers to those who suffered losses.
The most recent floods reiterated the acute fragility of the nation’s infrastructure and, by extension, its communities and productive sectors, when faced with extreme climatic shocks.
“The devastation caused by the 2021 floods served as an important reminder of the urgency with which more resilient infrastructure is needed,” the Ministry of Finance reported.