Guyana’s 4.1% growth in GDP last year despite challenges in the traditional sectors is partially attributable to developments in the construction sector and growth in the services sector, as preparations are made for the oil and gas industry.
The bauxite mining industry has also had an impact, as a result of new mines such as First Bauxite, said Nicholas Deygoo-Boyer, President of the Georgetown Chamber of Commerce and Industry (GCCI), as he spoke at the launch of the 10th edition of the Business Guyana Magazine held last Friday.
“What has kept the growth alive has been the Construction Sector (11%), with preparations for the Oil industry requiring an increase in construction of residential and commercial facilities, Bauxite Mining (24.6%) as a result of new mines such as First Bauxite, and growth in the Services Sector: Wholesale and Retail Trade as well as Financial Services – which grew due to the increase in business tourists, regional and expatriate workers, as well as the final completion of shopping centres such as the much talked about MovieTowne development,” Boyer related.
Boyer noted that analysis of statistics demonstrate that the biggest risk facing Guyana’s development is that of an undiversified economy and the spread of the Dutch disease.
“We will need to do more to support and improve our traditional sectors that are renewable such as agriculture and forestry for instance as they face the risk of losing competitiveness on account of higher wages in the oil industry and construction sector and appreciation in our currency,” he stated.
He added that there was a Balance of Payments deficit of $132.2 million versus $69.5 million in 2017, due to worsening in the country’s Current Account with little to offset it in the Capital Account and that inflation was pegged at 1.6%, a figure that could increase with demand.
Boyer noted that while credit to the private sector grew at 4.2% to $233.6 billion, “as commercial project sizes grow, indigenous banks will be hampered by a low single borrower limit, and local real estate developers will be outcompeted by regional ones that have access to a cheaper cost of capital”.
Furthermore, he referenced the increase in government spending that took place last year, noting that private sector spending can produce more growth than government spending, as evidenced by the statistics.
“The last bit of (economic) analysis that I want to leave you with is that Government spending for 2018 was 216.7 billion, which represented an increase of 11.1%. Again, contrast that with an increase in GDP of 4.1% (total Tax Revenue increased by 16%)…This is why in the expenditure approach to GDP analysis, the boosting the C— Private Sector consumption— is always better than just boosting the G, which is Government spending net of taxes, as an increase in Private Sector spending has a multiplier effect and can give more growth than a similar increase in Government spending,” he explained.
Boyer also addressed the issue of the December 21, 2018 no confidence vote against the government, which was recently validated by the Caribbean Court of Justice. He stated that the current affairs leave Guyanese in a state of uncertainty about the outcomes but that those gathered, members of the business community, should not allow themselves to be used.
“What we as Guyanese can see clearly is that the brinkmanship here is at play, and we are being used as pawns. I implore all seated here tonight, and the population, do not let puppeteers pull strings and talk about war, or disturbances. While I respect the right to protest and freedom of speech, I do not think that any of us has a right to divide. We are not at war with each other, nor do we need to be loyal to anyone based on our ethnicity,” Boyer asserted.
He added that going to the polls needs to become a routine exercise of democratic rights and one done without fear, and that all political parties are responsible for creating the atmosphere in which that can be achieved.
