WASHINGTON, United States (CMC) — The International Monetary Fund (IMF) says economic growth slowed in 2017, but became more broad-based as real gross domestic product (GDP) grew by 2.1 per cent, down from 3.4 per cent in 2016 in Guyana on the account of weaker than expected mining output and weak performance in the sugar sector.
“Nonetheless, non-mining growth rebounded to 4.1 per cent following a contraction in 2016,” according to an IMF mission headed by Marcos Chamon that ended a two-week visit here.
The mission said that construction expanded significantly, buoyed by higher public and private investments, and rice production recovered from weather-related shocks in the previous year.
“In 2018, the mission projects real economic growth of 3.4 per cent, driven by continued strength in the construction and rice sectors, and a recovery in gold mining. Inflation remained subdued at 1.5 per cent at end-2017, largely driven by food items, while core inflation was close to zero,” it said in the statement.
According to the IMF mission that met with Finance Minister Winston Jordan, Natural Resources Minister Raphael Trotman, Central Bank Governor Gobind Ganga, as well as representatives of the private sector and the trade union movement, weaker than expected export growth and higher oil prices contributed to the current account balance turning negative.
“Oil revenue significantly improves the fiscal outlook, and is expected to place the public debt on a downward trajectory,” the IMF team said, welcoming the progress made on establishing a comprehensive fiscal framework for managing oil wealth.
It said that debt sustainability concerns are attenuated by future oil revenues, but the financing of short-term deficits should be carefully managed.
But it warned that productivity-enhancing reforms are needed to improve competitiveness and facilitate inclusive growth. Infrastructure bottlenecks and high energy costs remain obstacles to growth.
“Meanwhile, notwithstanding significant upside benefits, the prospect of revenue from the oil sector could lead to real exchange rate appreciation, eroding competitiveness in some sectors. Therefore, regulatory and administrative measures should aim to reduce the relatively high costs of doing business in Guyana,” the IMF statement added.