Higher than expected GDP growth recorded last year
-end of year report
The actual Gross Domestic Product (GDP) growth for 2016 was 3.3%, which was higher than the 2.6% that was projected at the time of the presentation of the 2017 budget.
This information was presented as part of the 2016 End of Year Outcome report that was laid in the National Assembly last week.
According to the report, the 0.7% improvement was due to stronger-thanexpected performance in the gold, fishing, and construction industries even as the final production figures for the sugar and rice industries were below the projections at the time of the presentation of 2017 budget, as was output in the manufacturing sector.
Budget 2017 was presented to the National Assembly on November, 28 2016 and because the presentation was before the end of the calendar year, the 2016 economic and fiscal data presented were projections based on actual data available at the time and forecasts for the remaining months of 2016. The outcome report therefore presents an update on the projected data presented in the budget and was compiled using data estimates as of April 7, 2017.
“This End of Year Outcome – 2016 explains any notable differences between the projections and actual data, and provides an updated appraisal of economic conditions in 2016, to better guide policy going forward,” the introduction explains.
According to the report, the agriculture, fishing and forestry sector contracted by 10.4% in 2016, 0.9 percentage points more than the rate projected at the time of the budget presentation. The only industries
in this sector to experience positive growth were fishing and other crops, which recorded a 17.5% and 2.5% growth, respectively.
Sugar production, which the 2016 budget projected to reach 242,287 metric tonnes, was actually 184,400 metric tonnes. This was also less than the 189,000 metric tonnes projected in the 2017 budget.
While the 2017 budget presentation cited the El Niño dry spell experienced earlier in the year, which resulted in lower yields, combined with late planting and strikes during the second half of the year for the initial contraction, the outcome report noted that the industry underestimated the negative impacts of late planting of the second crop on production. This along with the late arrival of spare parts for factories, which negatively affected the processing stage of production, led to more contraction than projected in November, 2016.
Rice production, which was projected in the 2017 budget to reach 600,000 metric tonnes, actually yielded 534,450 metric tonnes. The poor performance of this sector was pegged to uncertainty in the rice industry in the budget presentation. Finance Minister Winston Jordan had said that El Niño and the loss of the lucrative Venezuelan market were primarily responsible for this result. The outcome report also blames lower-than-expected yields and acreage related to late planting.
Livestock production was near projections at a 5.6% shrinkage compared to a projected 5.1%, while forestry production contracted by less than projected, falling 27.3% compared with a projected 33.3%. This better than projected performance is said to be reflective of good performance in the construction industry.
Additionally fishing, which was projected to grow by 11.8%, actually grew by 17.5%, reportedly due in part to growth in the production of tuna, a relatively highpriced product.
The mining and quarrying sector, which was slated to grow by 35.7% in 2016, recorded an actual growth of 45.3%. This growth, which is the highest in over a decade, was attributed to stronger than projected growth in the gold industry, which grew by 58.1% in 2016, performing better than the 43% growth projected at the time of the presentation of the budget.
This difference was credited to “an unexpected spike in gold production in December, due to higher-than-expected production by both the foreign companies and small and medium-sized miners. Figures presented in the outcome report show that 712,000 ounces were declared, with 482,000 of these ounces produced by small and medium scale miners, while Guyana Goldfields Inc. declared 161,000 ounces, and Troy Resources Limited declared 69,000 ounces.
The bauxite industry, however, recorded a growth in output much less than the 9.6% projected at the time of the budget presentation. The actual growth was 0.1%.
“Growth in the other mining and quarrying sector, which includes production of diamonds, sand and stone, was largely in line with projections,” the report states without citing any figures. Minister Jordan had stated in the budget presentation that the other mining and quarrying sector was projected to jump by 22%, mainly due to a whopping 92.5% hike in sand production and a 9.2% increase in stone output.
The manufacturing sector, which was projected to contract by 7.1%, actually contracted by 9.5%. The report credits subpar performances in the rice and sugar industries for this decline.
Meanwhile, the construction industry grew by 6.3% in 2016, better than the anticipated 3.2% growth at the time of the presentation of the budget and the services sector grew by 0.7% in 2016, about half of the expected 1.3% projected.
“All subsectors had growth rates slightly below their projections, with the exception of wholesale and retail trade, which contracted by 1.8%, significantly less than the projected 3.8%,” the outcome reports notes.