THE Bank of Guyana (BoG) is reporting that global economic growth remained steady at 3.7 percent in 2018 and is projected to decline to 3.5 percent in 2019.

According to the bank’s annual report for the year 2018, growth in advanced economies declined, reflecting weaker performance in the Euro area and the UK. The Euro area experienced reduced domestic demand and political uncertainty. The United Kingdom experienced declining growth as the effects of Brexit continue to take a toll on the economy. Growth in emerging and developing economies’ declined due to decreased internal demand and volatile commodity markets, respectively. Inflation increased on account of high food and energy prices, while unemployment rates were largely unchanged in most of the world’s economies.

The report shows that Guyana’s economic growth rate was stronger at 4.1 percent for 2018 when compared to the 2.1 percent growth in 2017. This outturn was on account of higher production of bauxite, livestock, forestry and other commodities, as well as increases in construction, manufacturing and service activities. Favourable commodity prices, greater investment expenditure and moderate domestic demand were major factors influencing growth. However, the output of sugar, rice, gold and fishing declined, reflecting poor weather and road conditions, as well as lower domestic demand from regulatory requirements. The urban inflation rate was contained at 1.6 percent, despite moderate increases in the prices of food and fuel. The overall balance of payments deficit widened due to a relatively larger current account deficit, reflecting foreign direct investments (FDIs) in the oil-and-gas sector for both merchandise and service imports.

The capital account surplus resulted from higher inflows to the private sector in the form of Financial Draft International Standard (FDIs) and to the Non-Financial Public Sector in the form of disbursements. The overall deficit was financed from the gross foreign reserves of the Bank of Guyana and debt forgiveness. Gross international reserves were equivalent to approximately 2.3 months of import cover. The total volume of foreign exchange

transactions increased by 19.6 percent to US$8,548.1 million. The market was impacted by increases in transactions in most segments – licensed bank and non-bank cambios, as well as hard currency and foreign currency accounts. Money-transfer transactions were valued at US$276.1 million or 0.9 per cent below the 2017 level. There was a net purchase of US$146.0 million in the market, enabling the Guyana dollar to remain stable against the United States dollar at G$208.50.

The public sector total financial operations recorded a reduced deficit in 2018, owing to expansions in central government’s current revenues that outweighed current expenditures. However, the Non-Financial Public Enterprises’ (NFPEs) balance further deteriorated from its 2017 position due to heightened current expenditures. Budget 2019 states that central government fiscal deficit is estimated to increase significantly from higher current and capital spending, while the NFPEs’ overall deficit is estimated to decline on account of larger increments in current receipts, relative to the increase in current expenses.

The total stock of government’s public debt increased by 1.5 per cent, representing 43.9 per cent of Gross Domestic Product (GDP). The stock of government’s domestic bonded debt, which represented 10.0 percent of GDP, declined by 9.3 percent during the review period. This outturn reflected a reduction in the issuance of treasury bills.