2017 growth rate revised downward

Aug 06, 2017, http://www.kaieteurnewsonline....te-revised-downward/

…as sugar, forestry, mining and light manufacturing sectors contract

By Kiana Wilburg

Finance Minister Winston Jordan had initially projected for the economy to reach a 3.8 percent growth rate for 2017. But circumstances beyond his control have left him and his ministry with no choice but to reduce this projection to 3.1 percent.

This was revealed in his Ministry’s mid-year report on the economy.

The revision of the 2017 growth rate is due to the overall growth performance of various sectors in conjunction with the expected impact of declining sugar production. Like the sugar sector, there were other sectors which contracted for the first half of the year.

According to the mid-year report the forestry industry, for example, contracted by 18.2 percent in the first six months of this year, compared to the same period in 2016.

The Finance Ministry said that the declining production within the forestry industry was due to structural changes in the industry. It said that several large concessions have not been renewed, with two of those concessions accounting for almost thirty percent of total production.

In addition to this, the Ministry said that markets in China for species such as Wamara have reduced significantly.

During the second half of 2017, it was noted that forestry production is expected to rise as a result of a reallocation of 54 State Forest Authorizations (small forest concessions) covering 206,000 hectares made in March.

The Finance Ministry said that the Guyana Forestry Commission (GFC) will continue to work closely with the Ministries of Business and Foreign Affairs, and the private sector, to address the United Kingdom’s ban on Guyana’s non-certified greenheart logs.

The GFC is also expected to engage with community forestry operators to address challenges of access to export markets in order to enhance export opportunities and stimulate production.

MINING AND QUARRYING
According to the Ministry of Finance, the mining and quarrying sector contracted by 4.0 percent, during the first half of the year. In fact, Gold production fell by 1.7 percent to 317,096 ounces, compared to the same period in 2016.

Of the total gold declared, 65.7 percent came from small and medium-sized miners and dealers whose declarations were above projections while the two large gold companies were below projections.

It was noted that heavy rainfall and the switching to lower grade material by one of the producers, to facilitate remedial work at the higher yielding mine, affected production for the large companies.

Despite the slight decline in the first half of 2017, the Finance Ministry said that the overall production is still expected to surpass its 2016 level, with the industry expected to grow by 1.7 percent.

BAUXITE
The Ministry of Finance noted that the bauxite industry declined by 11.5 percent, as a result of reduced production of higher valued grades. It said that this was due to poor weather combined with mechanical issues at one of the mines.

However, the Ministry said that the production of metal grade bauxite (MAZ) increased by 97,016 tonnes or 21.3 percent. Additionally, the favourable international price for aluminum in 2017 is expected to boost output of bauxite during the second half of the year.

Furthermore, the Ministry said that 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 percent in the same period last year.

The Ministry said that this decline is driven by a reduction in the production of diamonds, sand, and stone. It said that 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.

MANUFACTURING
As for the manufacturing sector, the Finance Ministry said that this sector recovered in the first half of 2017, growing by 9.9 percent following a decline of 14.1 percent in the corresponding period in 2016. The Ministry said that this was mainly due to expansion in the rice sector.

It noted, however, both sugar and light manufacturing declined in the first half of 2017. Be that as it may, the Ministry pointed out that products, such as beer and stout, showed positive growth, in the first half of the year.

FINANCE /INSURANCE INDUSTRY
With the exception of the financial and insurance industry, the Finance Ministry said that all of the services industries expanded in the first half of 2017. Improved performance occurred in the electricity and water industry, which grew by 3.6 percent. Additionally, it was pointed out that the construction industry expanded by 2.1 percent.

Furthermore, it was noted that the transportation and storage industry also improved, growing by 2.5 percent as a result of an increase in land and air transportation. However, the financial industry contracted due to an increase in nonperforming loans along with stringent measures to reduce money laundering.

Mining and quarrying contracted by 4.0%