Good news for Guyana, bad news for AFC/APNU...

Guyana's economy is steadily progressing, further growth is expected in the first quarter. 

Gold prices, sugar slump will lower Guyana’s growth this year – IDB

A slump in gold prices and poor performance from the sugar sector will see Guyana facing major downside risks to its growth momentum, the Inter-American Development Bank (IDB) has said. In its Caribbean Region Quarterly Bulletin issued last month, the bilateral lending agency said that this will lead to a lower growth forecast for 2014 at 4.3 percent. This will be below the 4.8 percent growth recorded last year. Energy cost also remains a big worry for Guyana.

Rice helped buoy the economy last year but it may not be enough to sustain it at the same level this year, IDB says.

“Further downside risks may stem from lagging investments in productive infrastructure, especially roads, ports and electricity; as the economy’s competitiveness and capacity to diversify are stymied by high energy costs, limited electrical generation capacity and poor quality of electricity service.” During the year, lower gold prices and weak output from sugar prompted authorities to lower the growth forecast from 5.3 percent to 4.8 percent. “However, the economy remained well positioned for sustained economic expansion as growth continued to be broad-based and buoyed by the vibrant construction, agriculture, mining, and manufacturing sectors.” IDB noted that the struggling sugar industry still weighs heavily on Guyana’s overall economic performance. “During the first half of 2013, non sugar economic growth plateaued at 6.0 percent, while the sugar sector diminished by 32.5 percent.” Third-quarter performance indicated a further decline in output of 19.6 percent as a result of unfavourable wet weather conditions that hindered the harvest. “However, the authorities expect that increased output from the Skeldon Sugar Factory after its successful rehabilitation and good weather conditions in the fourth quarter can lead to the revised second crop target of 155,000 metric tons.” Rice blessings In contrast, rice output surged. Total rice production surpassed its end-of-year target of 500,000 metric tonnes in October 2013, and fourth quarter production estimates are on course to reach 522,000 tonnes (24.6 percent of 2012 production). “The authorities attributed the massive outturn in the rice industry to a combination of increased acreage and higher yields per acre through the greater use of improved varieties. These elements together continue to lower the cost of production as scale economies are realized.” Surplus returns and continued investment to increase production capacity have enabled gold miners to realize profits despite lower prices because of their relatively low operational costs in comparison with the cost of a greenfield investment. “However, prices could continue dropping as the peak season for consumption demand for gold ends and as global financial markets strengthen.” IDB warned that this poses a significant risk to the continued expansion of the sector. Another area of some concern for IDB is the domestic credit which has rapidly expanded more than 20 percent per year since 2010, primarily because of a housing boom and heavy investment in the rice and gold sectors. “Despite being well capitalized and profitable, with liquidity ratios above 30 percent, commercial banks are very exposed to commodity price volatility. Gold and rice production booms have fuelled real estate acquisition, a construction boom, and have thus increase demand for asset-backed loans.” The bank said there is a risk that a significant drop in commodity prices will cause serious stress in bank portfolios and increase nonperforming loans. More remittances With regard to remittances, after a brief period of decline, flows to Guyana began to show signs of a solid recovery. “Recently, they reached growth rates close to those recorded before the start of the global economic crisis. In 2012, total inbound remittances amounted to US$469 million, a 47 percent increase since 2009.” Authorities anticipate further growth of inbound remittance flows to reach US$498 million in 2013 as major source economies improve their growth performances. Remittance flows also represent an important source of income for thousands of families in Guyana who receive transfers to cover basic needs and invest in education, health, housing, and small businesses. However, the true value of remittance inflows and its development impact is difficult to determine, given that many Guyanese migrants remit by “hand carry,” which is not covered by the formal reporting system. Guyana also outpaces most of its Caribbean country counterparts in the share of remittances to GDP. Inbound remittances to Guyana account for roughly 13.6 percent of GDP, a close second to only Jamaica at 14.5 percent. The United States is the prime destination for Guyanese migrants and, as such, currently represents the largest source of remittance flows to Guyana at 63 percent.

diplomatic utterance has no effect on the bottom 40%; the poor.

Have they gotten more salt and rice in their pot??

NO.

End of story.

Why didn't you mention that Guyana is the main beneficiary of concessionary financing because of its high levels of poverty, and the fact that it remains the POOREST country in the English speaking Caribbean.

Indeed beg and child labor is very noticeable in Guyana, when compared to other parts of the English speaking Caribbean.  The average CXC performance remains among the WORST.

What benefits Guyana is that;

1.  it had a significant % of its debt written off. Also most of its foreign debt comes on concessional terms from the IDB, etc. "Rich" islands like St Kitts Nevis  (imagine that two volcanic peaks poking out of the sea deemed rich relative to Guyana) can't get those loans so much go into the private markets to raise debt.  Higher interest rates, and no write off.  The most one can get is a reschedule.

2.  Guyana, like Suriname, is a commodity producer, and so has benefitted from high prices for gold and rice.  This has had spill over impacts into real estate, and retail, which also benefits from remittances.

What happens if gold prices continue to drop, and if Asian countries have strong rice harvests, resulting in rice prices also dropping?

The only credit that the PPP deserves is finding new markets for rice, but that's a no brainer when we consider that Guyana is one of the few net exporters of rice in the Americas, which is a huge rice consuming area.

In recent weeks the price of gold has climbed above $1,300 per ounce.  If a mining company's break-even-point is $900 per ounce of gold produced then they would still make a profit. It won't be as much like when an ounce of gold was going for $1750 on the world market. They can maintain the same amount of profit in aggregate by producing more gold.

While that is true the PPP cannot take credit for high gold prices, which are beyond its control.  It should focus on reducing the vulnerability of the economy, and the population, should prices fall below costs of production, which will drive many small producers out of business.

Aside from a focus on another commodity, rice, I don't see evidence of any PPP strategy of developing the economy.

Guyana is no longer classified as a highly indebted poor country (HI.P.C) it is now classed as a middle income earning society.

This does not make sense when you still continue to Pay Sugar Workers G$800. per punt. If it does not make sense, then it's a lie.

Read the world bank report, educate yourself, and stop coming to this forum to parrot stuff, I advise you a few days ago to be an independent thinker, and share your own thoughts.

Mitwah was crossing the Berbice river in a ferry named Torani. A car was parked akwardly on the first deck. The captin of the ferry went around asking people whom he presumed was a vehicle owner "What's your number", meaning their licensed plate number. The captin approached Mitwah and asked him what was his number.  Mitwah shouted out his Punt #.

Mitwah is noticeable absent, probably he finally took our advice, and is reading a book, or crafting his "own" thoughts.

it is among the poorest CDB beneficiary nations, so qualifies for concessional financing, which tiny St Kitts and Antigua can't.  They are UPPER middle income countries, and for some purposes are classified as DEVELOPED.  Guyana is still LOWER Middle income.