Economy not on verge of collapse, outlook is for real economic growth in excess of 40 percent
Dear Editor,
On July 22, 2020, Stabroek News carried a letter titled `State of economy is likely to worsen more than casually projected’, in which the author conjures Guyana’s economy being in distress at the end of the first quarter, a situation he blames on alleged poor management and policy. However, in the absence of any supporting evidence one, obviously, must question the basis of his many assertions. Allow me to put forward some evidence that not only rebuts many of the claims made, but, also, emphasises to your readers the importance of reviewing publicly available data for their own benefit, and not take as “gospel” the opinions of every “expert”.
As highlighted in the 2019 End of Year Outcome Statement, Guyana’s economy grew in real terms, in 2019, by 5.4 percent, with the non-oil economy growing by 4.3 percent. This persisted into the first quarter of the year. However, we must keep in mind that Guyana’s first COVID-19 case was reported in March and resulted in several emergency measures being implemented to ensure the safety of Guyanese, which would have stymied economic activity since then. Additionally, the absence of a national budget and the protracted delay in finalising the General and Regional Elections would have also dampened further economic expansion this year. Despite these challenges, our economy is not on the verge of collapse. Indeed, the outlook is for real economic growth in excess of
40 percent.
Consumption and Economic Collapse In a subsequent interview with Guyana Diaspora News, the author notes that consumption spending is drying up and the economy is on the verge of collapse. He offers no data to support this conclusion. Here are some numbers to consider: Using total imported consumption goods as a proxy for overall consumption, we see that since 2015, there has been an upward trend (see chart below), with preliminary numbers for 2020 Q1 indicating growth of approximately 6.3 percent, or US$6.4 million, over the same period in 2019. The growth from 2019 spilled over to 2020, as the wholesale and retail trade industry continued to expand in 2020 Q1 amid notable demand. Total imported consumption goods were supported by food for final consumption, “other durables” and motor cars.
Obviously, the pandemic would have led to many households and businesses changing their spending priorities and patterns. This is the reality of the pandemic and Government continues to work within budgetary constraints to ensure that all are able to meet their basic needs. Since March, some of the measures put in place to help the citizens include tax waivers on medical supplies, deferment of payment of both corporate and individual advance taxes and PAYE, deferred loan payments, debt deferrals for up to six months for University of Guyana students, grants to small businesses, and food vouchers and hampers for those most affected by the pandemic. Government has also drafted several other measures to help accelerate post-pandemic growth, which, unfortunately, cannot be implemented within the current environment.
Moving on, the author joins a long list of detractors who seek to politicize the downsizing of the sugar industry, categorizing it as part of some “ill-conceived scheme” with racial undertones. As is known, publicly, in 2014, the Wales, Skeldon and Enmore estates operated at losses in excess of $1.5 billion. Guysuco was incurring