Exports and imports are crucial pillars in the structure of an economy. These two categories can tell you many things about the well-being of a country.
For example, if a country is exporting more than it imports, this signals that the economy is robust, self-sufficient and healthy. Where more exports are going out of a country, it means more foreign currency is going into the nation’s pockets while also signaling an increase in employment to ensure the surplus in exports.
But when an economy is importing more than it exports, it can mean that more money is leaving the nation’s reserves to pay for these imports and this can lead to the devaluation of the dollar. It also puts a strain on the economy, especially if these imports are largely for things which do not promote productivity in booming sectors, such as equipment and machines for the gold industry.
Therefore, imports, as important as they are, could signal that the economy is in an unfavourable balance. So where does Guyana stand?
According to statistics, Guyana ran a merchandise trade deficit (when imports exceed exports) of US$15.6 Million in February 2017. This represents a greater deficit of US$9.4 Million relative to February 2016. In February 2016, the deficit was US$6.2 Million.
Domestic exports (exports of locally produced goods) fell by US$2.7 Million to US$97.5 Million in February 2017, a decrease of 2.7 percent compared to February 2016. Exports in February 2016 were US$100.2 Million.
Imports, on the contrary, increased by US$6.8 Million or 6.4 percent in February 2017 to US$113.1 Million relative to February 2016. In February 2016, imports were US$106.4 Million.
Gold exports rose by US$3.3 Million or 5.2 percent to US$66.1 Million in February 2017 over February 2016 gold exports of US$62.8 Million. Relative to February 2016, exports from the Guyana Gold Board and Guyana Goldfields increased by 117.7 percent and 16.5 percent respectively, and decreased by 44.6 percent and 29.4 percent for Troy Resources and other dealers respectively.
Exportation of diamonds, fish, fish by-products and bottled rum and spirits also increased in February 2017 compared to February 2016. Diamond exports grew the strongest by US$2.4 Million or 289 percent to US$3.3 Million, whereas fish and its by-products and bottled rum and spirits grew by 55.5 percent and 2.6 percent respectively.
Bauxite, shrimp and prawns, on the other hand, decreased by 10.7 percent, 12.8 percent and 41.8 percent respectively.
Of the three categories of imports, only intermediate imports increased in February 2017 by US$1.7 Million or 29.8 percent relative to February 2016. The increase was largely driven by the growth in importation of chemicals of US$7.9 Million or 273.3 percent.
Consumption and capital imports decreased by 5.5 percent and 26 percent respectively. For consumption imports, all of the goods except food for final consumption and motor cars decreased. For capital goods, only mining machinery recorded an increase of 51.2 percent in February 2017 relative to February 2016.
For the time being, the Guyana Government has projected the growth rate (the percentage at which the nation’s revenues, sectorial production and exports grow) to be a 3.8 target. This is ambitious, some might argue, as last year it was projected that the economy would grow to 3.4 percent but barely made it to 3.3 percent.
The booming mining and quarrying and services sectors seem to have Guyana on target to reach the 3.8 percent growth rate. However, recent activities have led some skeptics to strongly conclude that it would have to be revised downwards. At the end of the half year, the figure was reduced .
The State of Revenue Earners
In February 2017, 3,669 tonnes of sugar was produced compared with 5,151 tonnes in February 2016. Production was affected by rainfall, strike actions which resulted in some workers being off the job, and suspended production at one estate.
Rice production for February 2017 reached 1,558.8 tonnes, compared to zero tonnes in February 2016. No production takes place in January and February since sowing normally takes place in these months. Production for 2017 is expected to increase by 10.3 percent; with the first crop already on target.
Forestry production for February 2017 amounted to 21,900 cubic metres compared with 25,319 cubic metres in February 2016.
Bauxite production for February 2017 was 103,606 tonnes compared to 136,377 tonnes in February 2016. Year-to-date production is 229,441 tonnes compared to 280,901 tonnes produced in 2016, a decline of 18.3 percent. Low production in the first two months was due to low demand. Nevertheless, this industry is expected to expand in 2017 as both demand and prices are expected to rise.
Gold production for February 2017 totaled 63,089 ounces compared to 58,485 ounces achieved in February 2016. This brings the year-to-date total to 108,048 ounces compared to 94,432 in 2016. The main driver of growth for 2017 is the small and medium sized producers whose declarations rose significantly, compared to a fall in declarations for the two foreign companies. Rising gold prices is partly responsible for the higher declarations from the small and medium sized miners.
A quick glance at the aforementioned reveals that four of the five industries are not performing well. If this trend continues, it is likely that the growth rate of the economy for 2017 will not meet the target set out by the Government.
(Article taken from the Guyana Inc. Magazine Issue 27)