— economy grew 2.6 per cent

Guyana recorded a 2.6 per cent real economic growth in 2016, a decline from the 4.4 per cent projected earlier this year, said Finance Minister Winston Jordan, who on Monday presented a $250B Budget for 2017.

At mid-year, a real economic growth rate of 2 per cent was achieved, but several industries and sectors, including sugar, rice, construction, and wholesale and retail trade, were showing signs of distress. As such, the projected growth rate for 2016 was revised downwards to 4 per cent.

“Since then, several unexpected developments, including the downsizing of Barama and Demerara Timbers Limited’s operations in the forestry sector; structural changes and ongoing strikes in the sugar industry; and the slow pace of implementation of the Public Sector Investment Programme (PSIP) conspired to reduce the real growth rate to 2.6 per cent,” Jordan told the House on Monday.

At the global level, there has also been a contraction in real economic growth. In October 2016, the World Economic Outlook (WEO), a publication of the International Monetary Fund (IMF), projected that global growth would reach 3.1 per cent, slightly less than the 3.2 per cent achieved in 2015.

Growth in advanced countries is projected to weaken by half of a percentage point relative to 2015. This decline is partially explained by the weaker-than-expected economic performance of the United States of America (US), due to weak investment and a decline in labour productivity.

Growth in the United Kingdom (UK) and the rest of Europe is also projected to fall in 2016, as the region comes to grips with the Brexit reality. But economic growth in emerging market and developing economies is expected to improve in 2016, rising to 4.2 per cent from the 4 per cent achieved in 2015.

This, Jordan said, reflects reduced concerns about near-term growth in China, and expectations that advanced countries would keep interest rates low.

Presenting Budget 2017 under the theme “Building a Diversified, Green Economy: Delivering the Good Life to All Guyanese”, the minister explained that the economy felt the drag of dismal output performances in sugar, rice, forestry, and construction, including housing.

PROVERBIAL SAND AND FUMES
According to the minister, the current Government inherited an economy that was built essentially on the proverbial sand and was running on the proverbial fumes.

“It is an economy which, in spite of positive growth performances averaging 4.5 per cent in the period 2010-2014, remains undiversified and incapable of withstanding even small shocks. It is hardly surprising, therefore, that we are reaping the whirlwind of downturns in these sectors. It will take more than just traditional policies and approaches to turn them around. What we need is a growth strategy that is broader in scope and more diversified in outlook,” he told the House.

At the global level, he also noted that there remains great uncertainty and adversity, noting that the challenges are many and the impact of external pressures cannot be underestimated.

“But we have resolved to pursue a growth strategy that breaks with the monotonous cycle of a few highs and perennial lows of prices of primary stage commodity production. We have to match the expectations of our people for a better life, but we would not be able to deliver if we stay the current course. To do so would allow the confluence of adversities and challenges to continue to constrain us from seizing the opportunity to chart a new direction,” Jordan contended.

In doing so, he said, Government would be employing a number of strategic approaches to achieve its objectives. These include stabilising the macroeconomic and public finances; preparing for oil and gas production; encouraging and supporting entrepreneurship, in particular those that involve new green technologies and processes; creating more job opportunities; increasing the focus on innovation, so as to increase domestic production and boost exports; moving towards a Smart Guyana that bridges the digital divide; reforming business facilitation, and expanding economic horizons; building climate-resilient infrastructure for economic expansion, and linking the coastland and hinterland; lifting the quality of life; addressing poverty; and reforming the public and financial sectors.

“In short, Budget 2017 is designed to consolidate the gains we have made since our accession to office, improve economic performance, and define a sustainable pathway to the happiness and prosperity of Guyana,” Jordan told the House.