THE 2010 mid-year report on Guyana’s economic performance presented in the National Assembly Thursday by Finance Minister, Dr. Ashni Singh, shows that this country is coping well despite continuing difficulties. The World Bank had estimated that GDP growth in the developing world to slow to a projected 2.1 percent in 2009 from 5.8 percent in 2008.
The bank more than halved its November 2008 projection of 4.4 percent growth in developing countries in 2009, reflecting the rapid deterioration of global financial and economic conditions.
The new Global Economic Prospects update also notes that global growth is expected to contract by 1.7 percent this year. This would be the first decline in world output since World War II. GDP is projected to decline by 3 percent in OECD countries and by 2 percent in other high-income economies.
The World Bank’s baseline forecast predicts growth momentum to turn weakly positive in 2010 as financial-sector consolidation, lost wealth and knock-on effects from the financial crisis continue to dampen economic activity. However, the pace and timing of the recovery is still highly uncertain.
Latin America and the Caribbean were also likely to see GDP contract in 2009, although at the country level outturns may be diverse. Overall, GDP was projected to decline 0.6 percent following gains of 4.3 percent in 2008.
According to an AP report, the World Bank said that the global economy will shrink this year for the first time since World War II and that the global financial crisis will make it tougher for poor and developing nations to access needed financing.
Trade was forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe, the bank said. The most drastic trade slowdowns were expected in East Asia, where growth had been robust, the bank said in a paper prepared for a meeting of finance ministers and central bank officials next week.
The impact on the poorest countries will be severe, the bank said, predicting that a group of 129 countries face a shortfall of $270 to $700 billion this year. The bank, which offers low-interest loans and grants to developing nations, warned international financial institutions will not be able to cover even the low end of that estimate. Only one-quarter of those vulnerable countries will be able to ease the economic downturn through job creation or “safety net” programmes, the bank said.
The ramifications of the growing financial crisis on the world’s poorest nations will likely remain for some time, the bank said. Because richer nations are borrowing more, developing nations are being squeezed out and many financial organisations that have provided financing to lower-income countries “have virtually disappeared.”
All factors considered, it is clear that Guyana has fared well under these extremely difficult and challenging global economic conditions.
However, the opponents of the government and cynics continue to sing their mantra of mismanagement of Guyana’s economy despite the fact that the statistics and facts point to the contrary. This is what the World Bank had to say about Guyana’s macro-economic management:
“The constraints that hinder the functioning of the economy at the macro level include those occurring in the external sector, those in the policy realm that affect the competitiveness of the economy, those which inhibit capital formation, and those which limit the government’s ability to carry out its proper role in the economy.
“In addition, for the past several years policymakers have been constrained by an overriding national obligation: the need to reduce inflation rates to acceptable ranges. In this regard and others, Guyana’s record of macroeconomic management has been successful. Inflation has been reduced, fiscal deficits have been contained to levels that could be financed internally and externally without difficulty, the banking system has been strengthened, and a comfortable level of foreign exchange reserves has been secured.
Nevertheless, this constraint on fiscal and monetary behaviour has produced some undesirable side effects, such as extensive operations on the bond market to sterilise liquidity, with the result of higher Government indebtedness and less availability of financing for private investments and relatively high real interest rates.”
“Fortunately, the economy shows signs of emerging successfully from this stabilisation phase and in the future policies can give greater emphasis to promoting sustainable economic growth.”
As a result, Minister Singh has reported to the National Assembly that the continued resilience of the Guyana economy has provided support to poverty reduction, emphasis on the accelerated implementation of programmes in the social sectors as well as key infrastructure gaps being addressed.
He also reported that the economy grew by 2.8% in the first half of the year and is projected to reach almost 3% for the entire year.
This is indeed a remarkable achievement when compared to what is happening in other countries and when it is mirrored against the global economic picture.
But, sadly, the reality in Guyana is that there are some who will always deny reality because of their narrow political agenda and rabid hatred of the government.