A look at some trends in the economy

research for, despite the growth that took place in the economy from 2007 to 2013, money was changing hands fewer times in the official economy than people were given to believe. Even in current times, there is the claim that the economy is not growing because of the absence of government policy. The data depicted in graphical form below indicate that other factors are interfering with the progress of the economy.

The figure shows a downward trend in the income velocity of money. The two years of growth in the velocity of circulation, 2013 and 2015, are exceptions to a trend that deserves further inquiry.

Credit

At the same time, credit to the private sector increased five per cent from May 2015 to May 2016. However, from October 2015 to May 2016, credit grew by two per cent. The growth in credit is evidence that the private sector is participating in the economy but might still be cautious. The banking system might be responding to this conservative attitude of the private sector by reducing interest rates as a means of stimulating borrowing. Since November 2015, interest rates have declined progressively when one uses the 3-month moving average to assess performance of that variable.

Optimism

The likelihood of growth becoming stronger in the second half of the year might be reflected in the performance of the stock index that this writer produces. From January 2016 to the present, the index has risen 5.4 per cent. The index has shown sustained growth over the last six weeks giving the impression that the private sector is still optimistic about the prospects of the Guyana economy.

LUCAS STOCK INDEX

The Lucas Stock Index (LSI) rose 0.60 percent during the second period of trading in July 2016. The stocks of one company were traded with 15,000 shares changing hands. The traded stock also rose 5.56 percent as the only Climber.