Georgetown, Ministry of Finance, September 3, 2022: According to the Ministry of Finance’s recently released Mid-Year Report 2022, Guyana recorded an overall real Gross Domestic Product (GDP) growth of 36.4 percent in the first half of the year, with the non-oil economy growing by 8.3 percent, reflecting Government’s supportive policy stance. The outlook for the second half continues to be favourable. For the full year, real GDP growth in 2022 is now projected at 56 percent overall, and non-oil GDP growth at 9.6 percent, maintaining Guyana’s position of global leader in economic growth.
“Led by President Ali and fueled by the rapid economic growth, we have embarked on a period of rapid transformation, and our Government has laid out a masterplan for the rapid development and transformation of Guyana. More importantly, we have demonstrated the capacity and commitment to working assiduously to make this vision a reality so that benefits can redound to citizens in the shortest possible time,” Dr. Singh had indicated.
Senior Finance Minister Dr. Ashni Singh had noted that upon the assumption to office by the President Irfaan Ali-led Government, the administration recognised the importance of a strong, diversified economic base and, as such, even in the early days of oil production, placed the highest level of importance on a resilient non-oil economy. The aim, therefore, was to modernise the economy’s traditional pillars and catalyze ‘a rapidly growing and highly competitive non-oil economy. This is evident in the nation’s non-oil economic growth at the end of the first half. The continued growth projected for 2022 builds on the 4.6 percent growth recorded last year.
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 percent 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 percent.
The mining and quarrying sector is estimated to have grown by 64.6 percent in the first half of the year, with a revised 2022 forecast of 99.9 percent driven by growth in the petroleum and other mining industries.
The petroleum sector expanded by an estimated 73.5 percent, 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 percent, and the other mining and quarrying (sand, stone, diamonds, manganese) industries by 36.3 percent, in the first half of 2022.
Manufacturing, Services and Construction
The service industries are estimated to have expanded by 7.6 percent, 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 percent. While the manufacturing sector is estimated to have contracted by 11.4 percent in the first half of the year, it is now projected to grow by 7.5 percent for 2022.
The construction sector is estimated to have grown by a strong 20.4 percent 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 percent.
Consistent with the expansion in the non-oil productive sector, credit to the private sector rose by 7.5 percent 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 percent, 26.7 percent, 3.2 percent, and 5.1 percent, to $110.3 billion, $34.2 billion, $98.6 billion, and $38.5 billion, respectively.
The Russian invasion of Ukraine has exacerbated supply disruptions to commodity markets, resulting in surging commodity prices, the effects of which are being felt globally. Guyana has not been spared. Consumer prices were 4.9 percent higher than levels recorded at the end of 2021 and this was due largely to higher food and energy prices.
Recognising the consequences of these inflationary pressures, Government implemented a suite of measures to ease the burden on the population. The excise tax on petroleum was reduced from 20 percent to 10 percent at the time of Budget 2022 presentation, and reduced even further from 10 percent to zero in March. Additionally, Government also utilised $1 billion for the purchase and distribution of fertilizer to farmers across the country, $800 million to provide cash grants to households in hinterland and riverain communities, among a number of other interventions.
Given the existing geopolitical tensions globally, inflation is now projected to be 5.8 percent for 2022.
NATURAL RESOURCE FUND
During the first six months of the year, Government had five lifts of profit oil from the two producing FPSOs. Further, Government 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 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.
In just over 24 months of this Government’s current term in office, implemented policies and programmes have already laid a solid foundation for realising the commitments made in the 2020 Manifesto, on the basis of which this Government was elected to office. Government remains steadfast in its efforts to continue to grow the economy and improve the wellbeing of all Guyanese, thereby building a modern and prosperous One Guyana.
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