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Guyana’s growth slumped to 3.9 percent in 2014; PPP, PSC differ on economic recession

A pie chart showing Guyana’s economic growth in 2014.

by Zena Henry and Denis Chabrol

A 1.7 decline in Guyana’s economic growth in 2014 is already being used as a political football by the main opposition People’s Progressive Party (PPP), although the Private Sector Commisison (PSC) is disputing claims that the country is heading into a recession.

Newly-elected Private Sector Commission (PSC) Chairman, Norman Mc Lean acknowledges that indeed the country seems to be slightly “stalled.” He suggested however that to say that the country is heading to a recession is an “overstatement.” He said he personally is not aware of the information being provided by the PPP.

Recent statistics provided by the PSC show that there has been a 19.5 percent decline in gold production, a fact that the then PPPC administration would have partly resulted in a decline in economic growth in 2014 from 5.6 percent to 4.5 percent.

The PSC reports that Guyana’s economy grew by 3.9 percent last year. Though the ninth consecutive year of positive growth, the business organisation notes that Guyana’s economy growth occurred at a slower rate than in 2013 when the economy grew by 5.2 percent.

“In Guyana, growth was also dampened by a decline in commodity prices, remittances and foreign direct investment,” said the PSC. In the area of gold alone, production fell from 481,087 ounces in 2013 to 387,505 ounces in 2014. Figures released by the PSC also show that there was a 56.3 percent increase in diamond declaration while there was an 8.7 percent dip in bauxite production from 2013 to last year.

Although sugar production remained sluggish, the PSC notes that there was a 15.7 percent increase in the sweetener from 186,771 tons in 2013 ti 216,186 tons last year. “The improved performance follows several years of steadily declining output. The increased output in the sector was aided by favourable weather and a decline in incidents of industrial unrest,” the PSC says.

The PPP is adamant that 2015 seems to be taking the country into a recession and wants the new government to fix it.

This is according to former Housing Ministry Irfaan Ali and former Public Works Minister, Robeson when they hosted a press conference at the PPP’s head office Thursday July 2. The two stressed, that the ongoing ‘witch hunt’ by the new government, a spike in crime, the failure to initiate government spending on projects and investors’ difficulty to predict the government’s policy directions are among factors contributing to the rising state of affairs.

While the party members only based their predictions on complaints, ‘acid test,’ and according to Benn, “PPP economists,” he said that, “we are being told of a marked slowdown in economic activity in the country and that it appears that the country; its economy is sliding into recess.”

The party members were asked whether it was too early to make such predictions and whether it was normal for a slow in activities since elections had just concluded.

Ali told the media that it is not normal. He said, “New governments bring new confidence in the economy and there is a spiral in economic activity, especially when you are saying that the government was corrupt and a government was managing the economy in a bad manner and you are now coming with freshness and newness, there is greater bouncy and confidence in the economy; there should not be a reduction,” he posited.

He explained further that, in a buoyant economy there was a period of stability until there is policy predictability. That, he said, was very important in the economy as the investor must be able to predict where the government is heading. “That period is not a long transition since during that period there is not necessarily a reduction in the economy or economic activity.”

“In this case we are seeing retrenchment,” he charged, claiming that persons were reporting to the party that they were being laid off from particularly major construction and industrial sectors. He also said members of the private sector were making claims of slow business too.

Ali claimed that currently economic activity has reduced. In Region Three, the former minister claimed, there were discussions among gas stations, utility stores owners, among others who, “reported to me that before elections there was a dip by about 10 percent of what their gross activity was in previous months and now they are reporting that there is almost a dip of almost 50 to 60 percent which is cause for concern.” He said the volume of confidence and predictably is not there.

The former Minister urged government to centralize all State funds, particularly from commercial banks to the Consolidation Fund and commence projects to create employment, starting with the $8B that his former ministry left behind. Minister Benn, agreeing that the law gives the government until September for the budget to be presented, asked the question, “Whether the country could wait so long?”