The Private Sector Commission's (PSC) first quarterly economic review has found that despite the crime situation's disruptive impact on business and a deep-rooted pessimism in the business community, there is some good news for the country's economy.
The introduction to The Guyana: Quarterly Economic Review, published by the Economic Policy Unit (EPU) of the PSC, said it seems likely that real gross domestic product will advance in 2002 at a pace that should approach the 2% projected in the last national budget and in line with the 1.8% currently projected by the International Monetary Fund (IMF). The IMF expects the country's economy to expand by 2.7% in 2003.
The review described the sugar and poultry sectors as the "good news" industries, with notable improvements in diamond production, certain pharmaceutical products, footwear and beverages. Seafood, too, has become a prominent industry competing with rice as a major export industry.
According to data quoted in the review and released in the Bank of Guyana's half-year report, for the first six months of the year fish and shrimp exports were valued at US$31.7M and rice exports at US$22.9M.
Earnings in the rice sector will continue to slide for the sixth successive year this year because of poor international prices and increasingly less cultivation of rice lands. Less than three-quarters of available land was prepared for the second crop, down sharply from utilisation rates during the first harvest of this year and the second harvest of 2001. The sector will not meet the 3.6% growth predicted in this year's national budget.
Traditionally rice accounted for roughly 20% of agricultural earnings and about 8% of Guyana's gross domestic products. While critical to the strength of the local economy, Guyana is a small player in the international rice trade and has no influence on prices and will remain hostage to the vagaries of world markets, says the report.
The outlook for the industry in the short term is mixed, the review said, as it has been projected that there will be a decline in consumption due to changes in dietary patterns, particularly in Europe, North America and South East Asia over the next ten years. Consumption in Latin America, the Caribbean and Africa is expected to rise. Over the long-term the most serious issue will be the loss of preferential entry into the European Union in 2007. Sugar
While sugar production continues to exceed expectations, the industry remains unprofitable. GUYSUCO recently declared a loss for the second year running. For the first nine months of the year, output was 54% above levels for the same period a year earlier and 5% above targeted levels for the period.
Poultry production surged and the report notes that the sector is one of the prominent success stories in the country. Major new investments were responsible for local production exceeding 11 thousand tonnes during the first nine months of the year, more than 41% over that of last year. As a result imports have fallen by 78%.
Egg production also accelerated sharply. Table egg output during the first nine months of the year has already surpassed last year's total and looks like equalling or surpassing 1996 levels, the last peak year.
There have been mixed results in the mining and quarrying sector. Diamond output has risen dramatically, up by almost 70% for the first nine months and gold production appears to be holding ground with last year.
Gold declaration declined slightly in the period from January to September, compared with year-earlier figures. Major operator, Omai Gold Mines Limited has passed its optimum production point and is experiencing a slowing down in activity, a decline of 8% over the past year. Declaration by smaller local operators was up by 25% due to more attractive gold prices.
The positive showings in the diamond sector have been attributed to new mines opening at Eping and Enachu, while at Kurupung operations were expanded. In addition the influx of Brazilian miners into the sector has added to production.
The report notes that in the bauxite industry production continued its downward trend even though Guyana has over 20 million tonnes of high quality bauxite ore and estimated reserves of over 56 million tonnes. Quarrying
Inspite of BK International moving into the quarrying business to supplement its construction and civil engineering activities this new investment was not sufficient to outweigh this year's 74% decline in production by Mazaruni Granite Products Limited and the almost 80% fall at Big Hope Mines. Stone production for the first nine months fell by 57.8% and sand by 25% from that of the corresponding period last year.
The manufacturing sector, the review noted continues to grow. Corrugated cartons slipped in 2002 but strength was noted in the pharmaceutical sub-sector. Travel
In travel and tourism, the Ministry of Tourism, Industry and Commerce has released data which states that the number of visitors is on the rise. The number of arrivals in the country has been sufficiently large that the record number of 112,000 in 1994 may be surpassed this year.
In other areas, the forestry sector showed mixed results; the country performed creditably in terms of new investment and re-investments in the economy; lending activity remains weak; inflation erratic; and interest spreads continue to be high.
Presenting the review to the media yesterday at PSC headquarters in Waterloo St, Chairman Dr Peter deGroot said that previously the PSC did not have the facilities to undertake any analysis of the economic situation in Guyana but with the establishment of the EPU which came into effect in June the unit would be able to analyse matters affecting the business community. The PSC would also be able to develop position papers which could be discussed with government for further implementation. The unit has in recent months been conducting monthly business surveys in relation to the economic situation.
The unit is currently being funded by the Canadian Government with input from the British and the Americans.
Dr deGroot said that it was unfortunate that the information generated in the first quarterly review was from government sources. However, he said that as the unit develops the capacity and the relationship with the various recognised companies and industries then it would be able to generate more meaningful data and not necessarily that generated by the government.
He noted that a lot of the data produced was outdated which was not very good for making educated projections for the future. (Miranda La Rose)