Economy set to grow 47.5 per cent this year
Paddy being harvested
on account of oil, advancements in rice industry, gold mining, construction
DRIVEN by increased production in Guyana’s burgeoning oil and gas sector and projected improvements in the performances of traditional mining and construction, Guyana’s economy is on course to growing by 47.5 per cent and 7.7 per cent in the non-oil economy, in 2022.
This economic performance will follow growth rates of 19.9 per cent and 4.6 per cent recorded at the end of 2021, despite the persistence of COVID-19, as well as the impact of floods. With this rate of overall growth, Guyana is likely to be amongst the fastest growing economies worldwide in 2021.
“The very creditable performance of the non-oil productive sector reflects the delicate and dynamic policy balance struck between aggressive containment of COVID-19 on the one hand and phased reopening of the economy on the other hand,” Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, said during his presentation of Budget 2022 to the National Assembly, on Wednesday.
He also credited the performance in 2021 to prompt and proactive flood mitigation measures, which helped limit the fallout in the agriculture sector and supported the sector in resuming activity in the shortest possible time.
Additionally, the services sector recorded extraordinarily strong performances in response to a policy framework that has stimulated historic levels of demand for services and facilitated a commensurate response on the supply side.
Based on Budget 2022, the government intends to maintain and even enhance its approach to stimulating growth in various economic sectors.
Moving ahead, growth this year would be primarily driven by the operationalisation of ExxonMobil’s second floating production storage and offloading (FPSO) vessel, the Liza Unity. In 2021, a total of 42.7 million barrels of oil were produced compared with 27.2 million in 2020.
Outside of oil, non-oil growth, this year, is expected to be driven mainly by rebounds in rice growing and gold mining, and continued expansion in construction activity and wholesale and retail trade and repairs.
The rice growing sub-sector is set to expand by 25.1 per cent in 2022, reflecting a reversal of the 20.5 per cent decline observed last year, largely on account of replanting efforts as well as the introduction of new high-yielding varieties.
Also within the agriculture sector, the sugar growing sub-sector is projected to grow by 11.8 per cent, as the Guyana Sugar Corporation (GuySuCo) begins to recover from the onslaught of the 2021 floods, with the aim of producing almost 65,000 tonnes of sugar.
Overall, the agriculture, forestry and fishing sector is expected to expand by 8.9 per cent this year after contracting by 9.1 per cent in 2021.
In the extractive industries, the mining and quarrying sector is projected to grow by 86 per cent, driven by expansion across all subsectors, namely petroleum, gold, other mining and quarrying, and bauxite.
Aside from oil and gas, the gold mining sub-sector is projected to grow by 12.2 per cent in 2022, on account of higher expected declarations from one large operator, and the small and medium scale miners.
Bauxite, like many other productive sub-sectors which faced tremendous interruptions in 2021, is anticipated to recover in 2022 and grow by 25.4 per cent, with greater output expected from both large operators.
Additionally, the other mining and quarrying sub-sector – which includes sand, stone, and diamonds – is also projected to grow by 8.4 per cent.
Also in line for positive results this year is the construction sector, which will see heavy government investment in projects across all sectors coupled with major projects coming from private sector investment initiatives.
“As a result, we project 10.5 per cent growth in the construction sector in 2022, on top of the growth observed in the sector last year,” Dr. Singh related.
The service sector, after facing significant challenges in 2020, began its recovery in 2021, on account of the phased reopening of Guyana’s economy and other measures put in place by the government to boost economic activity.
In 2022, all of the service industries are projected to expand by 3.8 per cent. Notably, significant increases are expected for wholesale and retail trade and repairs, transport and storage, financial and insurance activities, administrative and support services, and real estate activities, which will could grow by 6.5 per cent, 7.8 per cent, 3.9 per cent, 2.5 per cent and 2.3 per cent, respectively.
“Looking ahead, the future will be a period of strong economic growth which will moderate into the medium term. We will continue to be vigilant in our efforts to address supply side constraints in the near term, especially given the pre-existing presence of imported inflationary pressures,” Dr. Singh related, adding: “At the same time, we will remain focused on preserving and reinforcing fiscal and external sustainability for the long term, including by prudent management of the resources earned from our oil and gas sector.”