Year-end inflation estimated at 8.1%
On the strength of booming rice and bauxite output, Government’s mid-year report has pegged real growth of the economy at 4.9% compared to the 4.8% originally projected while inflation at year-end is expected to be 8.1%.
Finance Minister Dr Ashni Singh yesterday tabled the report in the National Assembly – around two months past the deadline – and with the date of publication in the report given as September 12, 2008.
Real growth for the first half of this year was 3.8% compared to 5.8% in the first half of last year. Based on the outlook for the rest of the year, the economy is now expected to expand by an overall 4.9% in 2008 compared to 5.4% last year and slightly higher than the originally projected 4.8%.
First crop rice output totalled 172,497 tonnes or 2.1% over last year’s figure. The second crop harvest is expected at 178,503 tonnes or 38.1% above the previous year’s tally.
Total production for the year would then be 17.7% over the previous year’s output. While output is projected to be significantly higher there were marketing problems recently in relation to Jamaica and this could reduce export earnings.
Sugar, which has been at the receiving end of bad news recently, registered a first crop total of 103,280 tonnes or a 2.3% over the previous year’s production. The mid-year report said that production was hindered by “weather-induced delays in harvesting, worker turnout levels that were below expectation, and unanticipated episodes of industrial stoppages”. To meet the budgeted yearly target of 290,000 tonnes, a second crop figure of 186,720 tonnes would have been required but the report said the second crop outturn was likely to be only 175,720 – meaning that production would climb by only 4.7% compared to the budgeted 8.8%.
The industry has also been affected by start-up problems at the new US$110M Skeldon factory project. The new factory has vastly higher production capacity than the old one and was supposed to have been pressed into service for the second crop. It has not been started up as yet and GuySuCo had to hastily restart the old factory.
GuySuCo has also come under strong attack from the government and the main sugar union over the management of the industry and the below-target production. The government is seeking to have an assessment done of the industry’s problems and the management contract will be put to tender next year.
Bauxite production under new operators Rusal and Bosai reached 1,164,735 tonnes, up by 22.8% over the previous year. Output for the year is expected to grow by 22.4% as compared to the budgeted growth of 17.1%.
Gold registered growth of 12% with raw gold declarations at 120,510 ounces as against 107,641 ounces last year in the first half. Annual output is expected to be 7.2% higher than last year.
This is due to the dizzying rise in the price of the precious metal as investors sought safe havens and it has had the impact of reducing investment in the diamond sector. Declarations of the precious gems have declined here steadily as a result of migration into the gold sector, the report said. Questions have also been raised about whether higher declarations here weren’t as a result of the smuggling of diamonds from Venezuela to avoid Kimberly Protocol controls in the trafficking of blood diamonds. Half-year declarations amounted to 82,468 metric carats, less than half of last year’s 170,226 metric carats.
According to the report, production in the other crops sector rose by 9.5% in the first half.
This was partly attributed to a national grow more food campaign which saw the countrywide distribution of seeds and other planting material. Annual growth is expected to be 8% compared to the original projection of 2.5%.
Forestry production slumped. The mid-year report pointed out that forestry was targeted to grow 3% – thereby recovering from the 11.1% contraction in 2007. “Instead, the first half of 2008 saw a 23 percent reduction in output…This arises from increased enforcement activities by the Guyana Forestry Commission which resulted in a number of operators being found to be delinquent in their required submissions to the Commission…” Though some recovery is expected, production is expected to slump by 14% compared to the modest projected growth of 3%.
Livestock production is expected to rise by 7.5% for the year while growth in the fisheries sector has been revised downwards from 3% to 2% following the contraction of the active fishing fleet due to increased fuel prices, declining productivity in some fishing grounds and piracy.
Manufacturing, which was expected to grow by 3% contracted instead by the same figure as a result in declines of production of certain beverages, foods and pharmaceutical products.
The engineering and construction sector recorded growth of 4.6% in the first half and is expected to round out the year at 6.4%.
Financial services expanded by 8.5% in the first half and the end of year growth is pegged at 7%.
In the first half of the year, the Consumer Price Index grew by 5.8% driven by high food and fuel prices. Inflation for the year is now revised from 6.8% to 8.1%. This projection has not taken account of the recent significant collapse of fuel prices.
