Growth set at 2.5% for 2004
Stabroek News
March 30, 2004
The economy is predicted to grow by 2.5% this year after it shrunk by 0.6% last year. Inflation is projected at 4.5% as against 4.9% last year.
Sugar output, which fell to 302,378 tonnes in 2003 from 331,052 tonnes the year before is now budgeted to reach 328,383 tonnes in 2004, not fully recovering from the decline last year. The prolonged drought in 2003 reduced cane yield and the higher than normal rainfall later, affected the second crop.
But these conditions were good for rice production which reached 355,019 tonnes last year, a 23.3% increase on the slump in 2002, and Finance Minister Saisnarine Kowlessar is projecting a marginal increase to 360,000 tonnes this year.
The agriculture sub-sector of livestock is expected to grow by two per cent as against four per cent in 2003; other agriculture 2% as against 2.2%; fishing 0.5% and forestry 0.5% as against two per cent the year before.
The manufacturing sector, which declined by two per cent last year, is projected to grow by 1.5%. In 2003, plywood output fell by 20%, and the switch of industrial users to self-generation led to lower electricity generation by the power company. There was also a decline in the production of beverages; rum 18%, beer and stout 22.4% and malta by 30%. There was an increase in the production of stock feed, cereals, aerated beverages, mineral and distilled water and corrugated cartons.
The mining and quarrying sector last year experienced a 8.7% decline, following a 6.9% decline in 2002 and is projected to decline by a further three per cent this year.
Omai Gold Mine Ltd's production largely influences the aggregate numbers because of its output level. Output for Omai fell by 16% in 2003 and is expected to fall by a further 10.8% this year as a result of the near exhaustion of its mine.
On the other hand, Kowlessar says the government is concerned over the 9.8% reduction in gold declarations by local miners in 2003 at a time when gold prices are very high. He is budgeting for an 8.8 % increase in declaration. Diamond declaration in 2003 hit 412,538 metric carats, an increase of 66.1%, a continuous upward trend for the past three years.
Diamond output is expected to grow by 1.8% this year. Bauxite output was 1.7 million tonnes last year, an increase of 4.7% but is expected to fall by 10.5% this year.
Kowlessar sees services as continuing to make a significant contribution to GDP with the transport and communication sector projected to grow by three per cent and distribution expected to grow by two per cent. The services sector grew by 2.1% last year.
Balance of payments
The balance of payments is expected to deteriorate sharply this year but the deficit will improve to US$5.4M from US$9.9M in 2003 and US$25.4M in 2002. The deficit last year was over financed by debt relief, leading to the Bank of Guyana increasing its net foreign assets by nearly US$1M.
Merchandise exports are budgeted to hit US$552.7M from US$517M last year as a result of increased volume exports and a favourable Euro/US$ exchange rate. Sugar receipts are expected to increase by 14.9% while rice receipts are projected to grow by 23.4% to reach US$148.4M and US$559M respectively. Sugar revenues in 2003 were US$129.2M and rice receipts were US$45.3M. Bauxite receipts are also expected to increase to US$48M and other exports will improve to US$137M. However, gold receipts are expected to drop to US$126.6M from US$130.9M in 2003.
Merchandise imports are targeted at US$645.4M, an increase of 12.9%, reflecting an acceleration of key public sector projects and increased imports of consumer and capital goods.
Net services are programmed to fall by 3.7% because of lower debt servicing commitments. Transfers are expected to remain flat and the current account deficit should rise from US$84.1M in 2003 to US$118.9M this year. The capital account is expected to improve to US$113.5M, reducing the overall deficit to US$5.4M.