Guyana is expected to end this year with an inflation rate of 3.3 per cent, a reduction from the 6.4 percent it recorded last year, a recent report from the International Monetary Fund (IMF) said.
According to the Regional Economic Outlook: Western Hemisphere (REO) report, which reflects developments as of October 1, 2009, Guyana is on course to experience an inflation rate of four per cent next year.
Based on the report, Guyana will see output growth of two per cent for this year and four per cent in 2010. Last year the country experienced output growth of three per cent.
The country’s External Current Account Balance as a per cent of the country’s Gross Domestic Product (GDP) is projected to be -19.1 per cent for this year and -21.3 per cent for next year. In 2008, the country recorded -21.5 per cent in this category.
In the fiscal indicators, the country’s Public Sector Revenue as a percentage of the GDP, for 2009 is projected to be 45.6 per cent, while for next year the projection is 45.2 per cent. In 2008, the country recorded 42. 4 per cent in this category.
In Public Sector Primary Expenditure as a percentage of the GDP, the projected figure for this year is 50.8 per cent while for next year it is expected to be 49 per cent. Last year Guyana recorded 48.4 percent.
For this year, Guyana is expected to record -8 per cent in the Public Sector Overall Balance, when expressed as a percentage of the country’s GDP. Guyana recorded -7.9 per cent in this category last year and is expected to record -6.6 per cent next year.
In the Public Sector Primary Balance expressed as a percentage of the GDP, the estimate for this year is -5.2 per cent, compared with the -3.8 per cent projected for next year and the -6 per cent reached last year.
The report pointed out that although Latin American and the Caribbean (LAC) countries were significantly affected by the global financial crisis, the worst is over for most of these countries. However, while the global economy is emerging from the recession, only a gradual recovery is anticipated, with modest growth in coming years.
The report said that “the crisis shocked the region with more expensive external financing and lower exports, workers’ remittances, and tourism receipts.” It further stated that “a wave of uncertainty dented confidence, and the private sector cut back spending. But following a sizable contraction through the first half of 2009, the LAC region is recovering and moderate growth is expected for 2010.”
The report noted that the LAC region’s performance during this crisis is considerably stronger than that of other emerging markets. The predicted growth forecast for the LAC region for this year is -2.6 per cent. However, for next year the overall growth for the region is expected to undergo a recovery and reach to slightly below three per cent. “Within the LAC region, we expect the fastest recovery in commodity exporting countries, with a median growth of about 3.5 per cent,” the report said.
The document noted that although the global economy is emerging from recession, only a gradual recovery is anticipated with modest growth in coming years. “Financial stabilization has greatly reduced the possibility of a systemic collapse, though there are still downside risks.”
“Growth in the United States and most advanced economies will remain sluggish, and employment conditions will likely get worse before they start to improve.” The report stated that “a permanent loss in potential output, weak private consumption, and much higher debt levels in the United States will be negative legacies of the crisis that could adversely affect the LAC region.”
The report noted that recovery prospects are stronger for countries that had the most room for policy manoeuvre, which are also benefiting in 2009 from much improved financial conditions and commodity export prices. Countries more reliant on tourism and remittances were not hit as forcefully on impact, but their recovery will be slower because their outlook depends significantly on lagging employment and consumption in the United States. Some of these countries also have less room for policy stimulus.
With regard to plotting the way forward, the report stated that “policies will have to strike difficult balances, according to country circumstances.” It noted that for better-prepared countries, which were able to apply monetary and fiscal stimulus, the main issue will be when to begin, and how fast to proceed with, the withdrawal of stimulus. However, the report noted that there are risks associated with removing stimulus too quickly, given that the global recovery is still not well entrenched. The report, however, noted that there were also risks to withdrawing the stimulus too slowly.
