Eco­nomic growth ex­pec­ta­tions less after poor half year per­for­mance

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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.”

Tra­di­tional Sec­tors

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.

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