…lowers overall regional projections due to ‘complex external scenarios’
THE Economic Commission for Latin America and the Caribbean (ECLAC) has projected a 4.6 per cent growth rate for Guyana this year even as it updated its growth projections on economic activity for this year for the Region’s countries.
In the updated projections, ECLAC slightly lowers its estimate for the regional average to 1.3 per cent compared with the 1.7 per cent foreseen in December 2018, when the institution released its annual report ‘Preliminary Overview of the Economies of Latin America and the Caribbean 2018’.
Recently, in an interview with this newspaper, Finance Minister, Winston Jordan, said that, despite the political fallout following the no-confidence motion, there has been no disruption to the economy which grew by 4.1 per cent last year. Describing the nation’s economic performance as “solid”, Minister Jordan said the sectors responsible for the “better than expected performance” were sugar, livestock, forestry, gold, diamonds and the wholesale and retail trades. The private sector has been saying that due to “uncertainties” economic activities have slowed. It (the private sector) however, has not produced actual data and method used to arrive at the claims.
Last year’s growth came on the heels of a less than three per cent GDP growth rate in 2017 and bettered the 3.4 per cent growth which was initially projected in November of 2018. The latter was based on figures at hand and projections, explained the minister. He recalled some of the challenges of the previous year such as the reforms implemented to stop the “haemorrhaging” of the sugar sector. Those in the gold mining sector included ore quality, fluctuating international prices and poor quality access roads. Minister Jordan noted that forestry, for example gained as the government had allocated funds to rehabilitate many hinterland access roads. This, he said, enabled the forestry sector to benefit. The sector also gained from the move to redistribute lands, formerly controlled by the BaiShanLin Company to smaller operators who seized the opportunity to utilise the tracts of forests.
Complex external scenario
Meanwhile, ECLAC’s new estimate for 2019 was released on Thursday, through a press release, and was influenced by the complex external scenario as well as domestic dynamics that are being observed in the countries of the Region, ECLAC said in a statement. As in past years, ECLAC projects growth dynamics that vary in intensity between countries and sub-regions, and that reflect not only the differentiated impacts that the international context has on each economy, but also the behaviour of the components of expenditure – mainly, consumption and investment – which have been following different patterns in the economies of the north and the south.
According to ECLAC, economic activity in South America will rise from 0.5 per cent growth in 2018 to 1.1 per cent in 2019. Meanwhile, Central America will grow 3.1 per cent in 2019, with slight downward revisions in the majority of countries. This is the consequence of the greater deceleration forecast for the United States this year, which affects trade as well as the remittances destined for the sub-region, among other factors. ECLAC adds that for Central America, Mexico, the Dominican Republic, Haiti and Cuba, growth will be 2.0 per cent. Likewise, the economies of the English- and Dutch-speaking Caribbean will also notch 2.0 per cent growth in 2019, near what was forecast in December.
According to the organisation, the main risks to the Region’s economic performance this year continue to be a lower rate of global growth, reduced dynamism in global trade, and the financial conditions faced by emerging economies. In addition, the trade war between the United States and China has yet to be resolved, which entails risks not only to global trade and the world’s growth rate in the medium term, but also to financial conditions themselves, since they tend to be linked to agents’ perception of greater or lesser risk.
Meanwhile, prices of commodities may also be negatively affected by an increase in trade restrictions, ECLAC adds. As of now, a slight decline in the level of average prices for basic products (of -5 per cent) is forecast for 2019, with energy products showing the steepest fall (-12 per cent). But since the level of global activity and global trade is worsening more than expected, this projection could be revised downward. In addition to all this, as in past years, concerns persist regarding the evolution of China’s economy: it is expected to decelerate once again in 2019, to 6.2 per cent growth. Finally, there are the habitual geopolitical risks, compounded by on-going uncertainty regarding certain processes that not only have geopolitical importance, but also economic significance on a global level, such as Brexit.
