Govt’s economic diversification yielding positive results
– 2022 Mid-Year Report
The PPP/C Government is dedicated to ensuring a strengthened and diverse economy for all Guyanese through investments in the non-oil sectors.
The Ministry of Finance’s 2022 Mid-Year Report states that while government is aware that a country’s oil-producing status yields significant benefits, it is not without inherent systemic risks.
These include risks associated with economic phenomena such as Dutch Disease, an economic situation that arises when the rapid development of one sector of the economy leads to the decline of others.
Government has always maintained that the oil and gas sector will not be depended upon solely to drive the economy. In fact, the administration has outlined economic plans in the various sectors that will build the country and people as a whole.
Aided by Government’s supportive policy stance, the economic performance at the end of the first half of 2022 was positive, and the outlook for the second half continues to be favourable, the report states.
Given the unique vulnerabilities of Guyana’s economy, government has strongly supported the non-oil productive sectors as well as critical social sector improvements.
The report shows the non-oil economy growing by an estimated 8.3 per cent, with supportive measures in place to continue increasing economic activity.
The agriculture and extractive industries have seen favourable performances, despite challenges in the respective areas.
In the first half of the year, the mining and quarrying sector is estimated to have expanded by 64.6 per cent, as a result of increased output from the petroleum, bauxite and other mining industries. The agriculture sector has made significant strides despite the terrors of the 2021 flood caused by the May/June rain. The importance of the development of the agriculture sector remains high on government’s agenda to proactively strengthen the non-oil sectors.
In the services and construction sector, it is estimated that services expanded by 7.6 per cent in the first half of the year. The services industry commenced its recovery in 2021 and continue to receive support by ramped up public and private sector activity this year.
Expansion in the sector was mainly driven by the wholesale and retail trade, and transport and storage industries, which grew by 17.2 per cent and 13.6 per cent, respectively, during the first half of the year.
The bauxite industry is estimated to have expanded by 31.9 per cent in the first half of the year. At the end of June, production stood at 343,922 tonnes, compared to 291,560 tonnes in the first half of last year.
Given this first half performance, and notwithstanding existing technical challenges facing operators, output is expected to continue to surpass 2021 levels in the second half of the year. As such, the projected growth rate for the industry has been upgraded to 37.5 per cent this year.
In the forestry sector, growth stands at an estimated 47.1 per cent in the first half of the year, largely on account of significant growth in log production. At the end of June, 203,220 cubic metres of timber products were produced, compared with 137,040 cubic metres at the end of June last year, driven by higher-than-anticipated production of logs.
Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, had highlighted that government has recognised the importance of a strong, diversified economic base.
To this end it had placed the highest level of importance on a resilient non-oil economy in the early days of oil production.
The aim was to modernise the economy’s traditional pillars and catalyse ‘a rapidly growing and highly competitive non-oil economy’.
This is evident in Guyana’s non-oil economic growth at the end of the first half of the year. The continued growth projected for 2022 builds on the 4.6 per cent growth recorded last year.