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|According to the recently released Ministry of Finance’s Mid-Year Report 2022, Guyana recorded an overall real Gross Domestic Product (GDP) growth of 36.4 per cent in the first half of the year, with the non-oil economy growing by 8.3 per cent. Projection for the second half is expected to be favourable. For the full year, real GDP growth is now projected at 56 percent overall, and non-oil GDP growth at 9.6 percent.
For the first quarter of 2022 the Bank of Guyana reported the economy is well-positioned to record real oil GDP growth of 49.6 per cent and 7.5 per cent non-oil growth by the end of this year.
Some analysts project real GDP from oil by year end would be about 60 percent.
Guyana is said to be among the world’s fastest growing economies. However, the wealth is not felt by the masses who complain daily about the high market prices, spending more for less, and have seen no increase in income, social programs or consequential stimulus packages to cushion escalating cost of living.
The Ministry is projecting inflation to be 5.8 per cent for 2022. In the first quarter’s report inflation was projected to be 4.1 percent. Some analysts have projected inflation will surpass the governmen’s figure. The Alliance For Change (AFC), in a press conference two weeks ago, said based on their projection inflation will surpass 8 percent for 2022, making it the single worst year for inflation in decades.
Given the projected rate, the AFC has called for immediate action to address the erosion of spending power that workers across Guyana are facing. To this end the party urged Government to begin negotiating with public sector unions with the base increase being 50 per cent pay given the 2022 Budget, to date, is valued at the hefty sum of GUY$597.6 Billion. The party also took the “opportunity to remind the Unions and the PPP administration that back in 2016, with a budget of $230 billion the PPP representatives, at the level of the National Assembly, called for a 50 % increase to be given to public servants.”
The key macroeconomic highlights are as follows:
Agriculture, Forestry and Fishing
The agriculture, forestry and fishing sector is estimated to have expanded by 10.9 per cent in the first six months of 2022, driven by higher output from the other crops, forestry and livestock, notwithstanding weaker performances in the sugar, rice and fishing industries. The sector is now expected to grow by 11.9 per cent,
The mining and quarrying sector is estimated to have grown by 64.6 per cent in the first half of the year, with a revised 2022 forecast of 99.9 per cent driven by growth in the petroleum and other mining industries.
The petroleum sector expanded by an estimated 73.5 per cent, with 34.6 million barrels of oil produced in the first half of the year. This was the result of the commencement of oil production at the Liza Unity FPSO in February. Also on the upside, the bauxite industry is estimated to have grown by 31.9 per cent, and the other mining and quarrying (sand, stone, diamonds, manganese) industries by 36.3 per cent, in the first half of 2022.
Manufacturing, Services and Construction
The service industries are estimated to have expanded by 7.6 per cent, driven largely by increases in wholesale and retail trade, and transport and storage. The overall 2022 growth rate for the services sector is now forecasted to be 6.3 per cent. While the manufacturing sector is estimated to have contracted by 11.4 per cent in the first half of the year, it is now projected to grow by 7.5 per cent for 2022
The construction sector is estimated to have grown by a strong 20.4 per cent in the first half of 2022, reflecting intensified activity in both the public and private sector.
BALANCE OF PAYMENTS
The overall balance of payments recorded a US$100 million deficit at the end of the first half of 2022, reflecting primarily higher cost of fuel and capital imports.
With respect to trade, export receipts expanded by US$2,330.2 million, outweighing the US$506.6 million increase in imports. Notably, these receipts grew largely as a result of higher export earnings from oil, while, at the same time, non-oil export earnings increased marginally by 2 per cent.
Credit to the private sector rose by 7.5 per cent to $308.3 billion.
This primarily reflects expanding credit to the services sector, manufacturing sector, for real estate mortgage loans, and to households. These increased by 8.2 per cent, 26.7 per cent, 3.2 per cent, and 5.1 per cent, to $110.3 billion, $34.2 billion, $98.6 billion, and $38.5 billion, respectively.
Consumer prices were 4.9 per cent higher than levels recorded at the end of 2021 and this was due largely to higher food and energy prices. Blame is solely attributed to the Russia invasion of Ukraine and resulting price increases. In light of the same reason some countries have implemented measures to reduce the impact on the masses in an equitable manner.
The Government implemented an excise tax on petroleum, reducing it from 20 to 10 per cent at the time of Budget 2022 presentation, and to zero percent in March. GUY$1 billion was used for the purchase and distribution of fertilizer to farmers. GUY$800 million as cash grants to households in hinterland and riverain communities.
NATURAL RESOURCES FUND
During the first six months of the year, Government had five lifts of profit oil from the two producing FPSOs. The Government has received US$307 million in revenue from their share of profit oil, along with royalties to the tune of US$37.1 million, in the first half. The cumulative balance on the Natural Resources Fund (NRF), inclusive of interest income, was US$753.3 million, after withdrawing US$200 million in May.
Government anticipates 13 lifts of profit oil for 2022, and subject to the evolution of world market oil prices, now projects US$1.1 billion from the sale of the country’s share of profit oil, and US$147.7 million in royalties.
To view the entire Mid-Year Report 2022, click here: https://finance.gov.gy/wp-content/uploads/2022/09/Mid-Year-Report-2022-FINAL-compressed.pdf