This columnist has not gone mad, at least not yet. I am just mesmerized that Dr Ashni Singh who Manzoor Nadir of the PPP/C/TUF rates as one thousand times better than Peter D’Aguiar as Finance Minister, has finally met the statutory deadline for the annual mid-year report. (For the younger among us Peter D’Aguiar, the first and only [T]UF member trusted with the portfolio of the finance ministry was used and discarded by Burnham.) Singh’s achievement about the report vindicates the surprise I openly expressed last year to the now forgotten call by the Economics Affairs Committee of the National Assembly for an extension of the deadline for the report. Au contraire, Dr Singh proves that he could comfortably live with a shorter period!
More than being timely, the 2011 mid-year report, according to the President, who has traversed the globe in a shorter time than Jules Verne could have imagined, is among the best performing economies in the world with an annualized growth rate of 5.9% and an unemployment rate within striking range of the USA, according to Manzoor Nadir.
The remarkable growth comes, not from the powerful narco-sector of the economy as the doomsayers would have us believe, but mainly from the politically sensitive sugar and rice sectors which prove that even agriculture responds to election year politics. Indeed it shows what any MBA 101 course – citing the Ministry of Agriculture as a case study – would tell us: politics triumphs over incompetence.
Sugar and rice and all things nice
According to the Minister, in the first half of 2011, the Guyanese economy achieved real economic growth of 5.9 per cent with the non-sugar sectors growing by 5 per cent. It was sugar and rice however that were the star performers. Suggesting that after billions of dollars we can get back to the performance levels of 2004, sugar production in the 2011 first crop was 106,871 tonnes, a 30.5 per cent increase over the first crop of 2010, with a little help from an extension of the crop period. While this may affect the quantity of cane available for the second crop, the government seems optimistic that the full year 2011 target of 298,879 tonnes is achievable, perhaps with a procrustean extension of the year.
Rice too has done well with first crop rice production of 207,514 tonnes, 23.3 per cent higher than the corresponding period in 2010 and the highest first crop in the industry’s history. Taking part credit for the sector’s performance, the government claims that the growth in production was attributed mainly to significantly improved drainage and irrigation as a result of government investments, the development of a new and more tolerant rice strain by the Guyana Rice Development Board, higher yields and, most importantly, a higher acreage of paddy planted.
I witnessed some damage to rice along the Essequibo but the Minister of Finance was confident enough to revise the 2011 full-year growth in the industry from 4.9 per cent to 12 per cent.
Grow more pig tail
The Minister reported increased overall production levels in the livestock industry by 2.7 per cent, with increased production “evident” in areas of poultry meat, table eggs, mutton and beef while pork production declined. When one boasts of such sterling performance words like “evident” tend to raise doubts about the reliability of the data. Two other comments before we move on: while the Minister was exulting about sugar, the supermarkets were complaining to the press that they were getting no supplies, a matter about which the Guyana Sugar Corporation appears to have had no knowledge. The second is that while we have an active Grow More Food campaign run by the Ministry of Agriculture, the supermarkets which are springing up at just about every corner of Guyana stock mainly foreign items. My friend Raymond likes to complain that he cannot get local pig-tail and cowheel and is forced to buy those items which are imported from Canada. That surely makes no economic or policy sense and some explanation would normally be warranted.
The fisheries sector seems to be in some decline and recorded a negative growth of 2.2 per cent during the first half of the year, compared with a target of 0.4 per cent over the production performance of 2010. As a result the industry is now projected to contract by 4.7 per cent in the full year.
Green and gold
The forestry sector had a negative growth in the industry of 30.3 per cent as a result of contraction in the production of logs, lumber and roundwood. As a consequence, the sector is now projected to contract by 19.9 per cent by year end compared to an earlier projected contraction of 1.4 per cent.
There are two significant segments to the mining and quarrying sector – bauxite and gold and diamonds. Production of bauxite in first-half 2011 reached a total of 815,505 tonnes, an increase of 38.6 per cent compared to the same period in 2010. However because of the composition of the industry’s output, a higher proportion of lower grade to higher grade product, converts into a sub-sector growth of 13.8 per cent.
Total gold production in the first half of 2011 was 163,413 ounces, an increase of 14.9 per cent over 2010 which was itself an outstanding year. With the incentive of ever higher gold prices, gold production for the year is now projected to reach 320,000 ounces. On the other hand the diamond sub-sector declined in the first half by 19%.
Manufacturing and water
Mainly driven by, but not entirely on account of sugar and rice, the manufacturing sector is recorded as having grown by 10.6 per cent, Given that rice and sugar were expected to grow significantly in any case, it is not clear why the target for the year has been revised upwards from the budgeted 7.7 per cent to a now expected 9.4 per cent.
Owing to significant investments in the electricity and water sector by the government, the sector is estimated to have grown by 2.6 per cent for the comparative half-year. With more planned government investments, the Minister has revised upwards the sector’s projected annual growth rate 0.4 per cent to 2 per cent.
The Minister reported that while the wholesale and retail sector had been projected to grow by 4.4 per cent, the actual for the first half of the year was 21.7 per cent, attributed to him as “buoyed by the growth in sugar, rice and light manufacturing which have fuelled the availability of supplies, increase in imports of food for final consumption, beverages and tobacco, fuels and lubricants, textiles and fabrics, and building materials.” This is a truly remarkable growth and suggests a level of spending power that many would consider beyond the economy’s capacity.
Complementing the other sectors of the economy, the information and communication sector is estimated to have grown by 5.5 per cent in the first half and as a consequence the 2011 budget projection of 5 per cent is retained. Similarly, the Minister estimates that at the end of the first half, the finance and insurance industry had recorded a growth rate of an incredible 16 per cent, with much of this driven by expansion in activity by the commercial banks. Of all the substantial claims made, I would say that this “estimate” is more than mildly exaggerated.
To complete the story of sectoral growth, the education and health and social services recorded estimated growth of 3 and 3.4 per cent respectively for the first half. In his 2011 Budget Speech the Minister did not announce the growth projected for these sub-sectors but in his mid-year report he announced that their budget growth projections for the full year have been revised to 1.5 per cent and 1.9 per cent, respectively.
Next week we will look at the balance of payments and some of the monetary environment in which the economy performed.