Economic growth expectations less after poor half year performance
Minister, Winston Jordon has had to revised government’s initial national growth projection from 3.8 percent to 3.1 percent. This is due to poor performance of several economic sectors, including gold, which has been the mainstay of the economy until recently.
These disclosures were made by the Minister in the National Assembly recently when he presented the country’s Mid- Year Financial Report for 2017.
Of note in the report is that while many of the traditional sectors such sugar and forestry continues to perform poorly, the gold sector which has been credited with keeping the economy buoyant in recent years, has now also begun to decline in terms of production and earnings from sales on the international markets.
Total earnings from gold exports declined from a high of US$390.7M, in the first half of 2016, to US$388.8M in the first half 2017, a decline the equivalent of G$404M.
Minister Jordan attributed the decline in gold earnings and production due to poor weather, despite a marginal increase in average export price over the period.
Actual Gold production fell by 1.7 percent to 317,096 ounces, in the first half of 2017, compared to the same period in 2016.
Of the total gold declared, Minister Jordan says 65.7 per cent came from small and medium-sized miners and dealers, whose declarations were above projections while the two large gold companies were below projections.
The Bauxite Industry also continued along its economic decline recording a further 11 per cent decline in production in the first half of this year.
According to the information supplied by the Finance Minister, the bauxite industry declined by 11.5 per cent, as a result of reduced production of higher valued grades. “This was due to poor weather combined with mechanical issues at one of the mines.”
He reported however, production of metal grade bauxite (MAZ) increased by 97,016 tonnes or 21.3 per cent.
He said the favourable international price for aluminum in 2017 is expected to boost output of bauxite during the second half of the year.
The other mining and quarrying industry contracted by 13.1 percent, in the first half of 2017 in comparison to a positive growth of 13.9 per- cent in the first half of 2016.
This decline, he said, is driven by a reduction in the production of diamonds, sand, and stones. “Declining diamond production was attributed to falling global prices and possible substitution by some miners into the gold industry as a result of the favourable prices of gold.”
The Minister did report some good news in that the manufacturing sector recovered in the first half of 2017, growing by 9.9 percent following a decline of 14.1 per cent in the corresponding period in 2016, which he said was mainly due to expansion in the rice sector.
According to Jordan in his report, rice production in the first half of 2017, recorded 349,867 tonnes, an increase of 31.6 percent over production in the first half of 2016.
This noteworthy performance, he said, was attributed to a rise in acreage sown in all regions, especially in Region Five where acreage sown rose by 30 percent to 42,595.
Overall, the agriculture, fishing, and forestry sector grew by 6.4 percent, in the first half of 2017, underpinned by the recovery in the rice industry and improved performance in the fishing industry.
According to Jordan however, compared to the first half of 2016, rice export earnings declined by US$11.1M to US$77.2M, in the first half of 2017.
This, he said, was due to a decline in volume exported despite higher export prices. The Minister noted however that due to high levels of pro- duction, exports are expected to grow during the second half of 2017, as millers reduce their inventories.
Sugar Earnings Improve The Skeldon Sugar Factory has since also proved to the bane of the industry again for 2017. According to the Finance Minister, sugar production fell by more than 12 per cent to 49,606 tonnes at the half year, compared to 56,645 tonnes during the first half of 2016.
“This shortfall was mainly due to no production at the Skeldon estate because the boilers were unsafe and required significant repairs” Jordan posited.
He also blamed the late supply of critical operating materials such as fertilizer; pest damage, particularly at the Blairmont and Uitvlugt estates; unfavourable weather; and strikes and absenteeism.
As a result the indust r y was unable t o r eap its entire first crop, with approximately 150,000 tonnes of cane being carried over t o t he second crop of 2017.
Despite the lower than anticipated production locally, prices on the international market did see sugar earning better than expected prices bringing in US$19M for the first half of the year.
According t o t he i nformation supplied by the Finance Minister, “despite falling production, as Guyana was able to receive higher t han anticipated export prices for this commodity… Export earnings for sugar decreased from US$20.8M, in the first half of 2016, to US$19.8M, in the first half of 2017.”
Among other exports, fish and shrimp as well as and rum and other spirits, and wood products showed significant growth in the first half of 2017 compared to the same period in 2016.
The government has not been able t o spend most of the money allocated to the capital programme.