Despite a number of factors such as the COVID-19 pandemic and recent catastrophic flooding which have stymied economic development, Guyana’s domestic economy continues to record positive growth and moves along an upward trajectory.
This was highlighted in the country’s Ministry of Finance Mid-Year Report 2021 which states that Guyana’s real Gross Domestic Product (GDP) is estimated to have grown by 14.5 percent while its non-oil GDP expanded by 4.8 percent in the first half of 2021.
The growth rate of real GDP is one of the most common indicators used to track the health of a nation's economy. In simple terms, an increase in real GDP is interpreted as a sign that the economy is doing well. Prima facie, a healthy economy would mean lower unemployment rates and higher wages.
The growth has been recorded despite the country, like the rest of the world, grappling with the deadly repercussions of the COVID-19 virus, but particularly amid the unprecedented flooding the country experienced for the first half of 2021 which ravaged many sectors, particularly one of the largest, agriculture.
Against this backdrop, the country is forecasted to record 19.5 percent real GDP growth overall, and 3.7 percent non-oil GDP growth for 2021, the Ministry of Finance reported.
This marks a slight decrease from the Bank of Guyana forecast reported in their Quarterly Report and Statistical Bulletin, March 2021, which stated Guyana’s economy is projected to record an estimated real oil GDP growth of 20.9 percent while the non-oil economy is estimated to grow by 6.1 percent for 2021.
In the first half of the year, it is estimated that the agriculture, forestry and fishing industries contracted by 2.4 percent, compared with a decline of 4.1 percent during the same period last year.
The rice industry grew by an estimated 7.8 percent in the first half of the year and rice production reached 353,289 tonnes despite the impact of the floods on the first crop, but marginally lower than the target set for the period.
The livestock industry is estimated to have grown by 10.6 percent when compared with the first half of 2020. Growth was observed in the production of poultry meat, mutton, beef, pork and table eggs, while the production of milk fell by 15.2 percent, when compared with the same period last year.
In contrast, at the end of the first half of the year, the fishing industry contracted by an estimated 6.6 percent when compared with the same period in 2020 while the forestry industry is estimated to have contracted by 7.1 percent when compared with the first half of 2020.
In the first half of the year, the mining and quarrying industries are estimated to have grown by 23.1 percent. Total output from the petroleum sector increased by 65.4 percent when compared with the same period in 2020. As a result, the sub-sector grew by 32.3 percent in the first half of 2021.
At the end of June, the bauxite industry recorded a contraction of 18.4 percent when compared with the position at the end of June 2020 while the gold mining industry is estimated to have contracted by 20.9 percent when compared with the same period in 2020.
The manufacturing sector is estimated to have grown by 13.1 percent when compared with the same period in 2020, the services industries are estimated to have expanded by 9.4 percent and the construction sector is estimated to have grown by 25.5 percent when compared with the first half of last year.
For comparison, the Ministry reported that the global economy is expected to recover in 2021 and grow by 6 percent. In advanced economies, growth is projected to increase to 5.6 percent in 2021, up from the 4.6 percent decline recorded in 2020 while emerging market and developing economies are also projected to expand at 6.3 percent in 2021, compared with an estimated decline of 2.1 percent in 2020.
At the end of the first half of the year, Guyana’s overall balance of payments recorded a deficit of 67.4 million USD, compared with a deficit of 2.8 million USD at the end of June 2020, consumer prices were 5.6 percent higher than the levels recorded at the end of 2020 and the official exchange rate of the Guyana dollar to the US dollar stood at $208.5 in June 2021, unchanged from the rate in December 2020.
The Ministry of Finance reported that the favorable economic performance at the end of the first half of 2021 in the non-oil economy bodes well for the upcoming second half of 2021 and beyond and it is expected that advances in key investments, both in the public and the private sector, will buttress the second half performance of the economy.
“Efforts to safely reopen the economy and manage the fallout from the floods placed significant pressures on existing systems and resources. Notwithstanding, Government’s response has been proactive, with injections of significant allocations into affected sectors and vulnerable segments of the population. The result was positive real economic growth both overall and in the non-oil economy, despite the shocks experienced.” the report stated.