–Bank of Guyana optimistic that high level of growth achieved during mid-year will be sustained
OWING to Guyana’s economic performance in the first half of 2021, the Bank of Guyana is optimistic that the high level of growth will be sustained as the year draws closer to an end.
The Central Bank, in its mid-year report, related that the Guyanese economy recorded positive growth during the first half of 2021 from heightened activities in almost all of the major sectors.
Improved performances were recorded in the construction, petroleum and gas and support services, manufacturing and the service sectors, while the agriculture sector recorded reduced output due to unprecedented flooding in May and June.
On the other hand, the growth in the non-oil economy was supported by government-budgeted fiscal policies, removal of restrictions as well as accommodative monetary policies.
When aggregated, the statistics show that real-oil Gross Domestic Product (GDP) grew by 14.5 per cent, while non-oil GDP increased by 4.8 per cent.
After contending with protracted General and Regional Elections and the direct and indirect effects of COVID-19 in 2020, the Guyanese economy managed to rebound due to the lifting of COVID-19 restrictions, moderate rate of vaccination, fiscal stimulus, structural reforms, accommodating monetary and financial forbearance policies as well as higher commodity prices from international trade.
More specifically, this performance, according to the Central Bank, was possible because of the reduction of taxes, transfers to households and public enterprises, increased spending on public and private infrastructure, among other things.
Due to unprecedented floods in May and June, and the lingering effects of the COVID-19 pandemic, the revised full-year forecast for real GDP growth in 2021 is now 19.5 per cent overall, and 3.7 per cent for the non-oil economy.
Earlier this year, Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, had said that Guyana would be one of the fastest growing economies in terms of real GDP, and would see rapid transformation in a number of sectors, especially since the government would make efforts to boost the non-oil economy as well.
“We’re anticipating a rapid expansion in the services sector, including transport and logistics, construction of infrastructure, including roads, bridges, office buildings in the private sector, etc.., along with expansion in other services such as financial services, all of which will contribute to rapid expansion in real output,” Dr. Singh had said.
He added: “So, you’re going to see Guyana being one of the fastest growing economies in real GDP terms; globally in the hemisphere, and certainly in the Caribbean… A lot of the real GDP growth in the region will be driven by Guyana.”
Dr. Singh, like the Bank of Guyana, is optimistic that the performance recorded 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. 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.
From the Central Bank’s perspective, the positive year-end performance is expected on account of higher output of oil coupled with improved performance in all other sectors, as the economy continues to rebound from the COVID-19 pandemic.
The global economy is expected to grow throughout the year and into 2022. However, future growth prospects are subject to uncertainty and downside risks involving new outbreaks and more deadly, vaccine-resistant variants of the virus.
More equitable vaccine distribution is required if the pandemic is to be effectively managed. Additionally, high debt levels among Emerging Markets and Developing Economies (EMDEs) could lead to financial stresses and rising prices and continued inequality could result in social unrest.
A continuation of accommodating fiscal and monetary policies is expected at least in the short term as economies return to health. By 2022, output is still expected to remain below two per cent pre-pandemic forecasts.