GUYANA
AMID THE WORLD ECONOMY
By Prem Misir, Ph.D.
The World Economy
Guyana's Economy
Guyanese critics seem to have a penchant
for isolationist explanations for problems in the political
economy. For instance, they attribute the current economic
sluggishness totally to the Government’s policies and
programs. These critics make minimum or no attempt to anchor
their explanations of the economic conditions in the realm
of the global economy.
The political commentaries seem to liken
the Guyana economy to a vague experiment in a laboratory.
Daily remarks present erroneous evaluations of and grandiose
prescriptions for the economy. But these critics make a feeble
attempt to show how their recommendations can be transformed
into reality. It’s not sufficient only to say what should
be done, but also to show how the ‘what’ is converted
into practicality. Many critics present their evaluations
and prescriptions without factoring the world economy’s
impact on the Guyana economy. By so doing, their criticisms
of the economy remain in the realm of experiment and vagueness.
What is happening in the global economy?
The
world economy
Some central bankers, at their annual meeting of the Federal
Reserve Bank of Kansas City in Jackson Hole, Wyoming, USA,
in 1998, acknowledged that the current global economic conditions
are the worst they have witnessed so far.
According to the United Nations Conference
on Trade and Development (UNCTAD), the world foreign direct
investment in 2001 will be about US$760 billion, a reduction
from US$1271 billion in 2000. Further HBSC Holdings estimates
that global trade, after rising 12.6% in 2000, will show an
increase of only 0.9% in 2001 and 2% in 2002. Morgan Stanley
& Co reduced the growth rate forecasts for the United
States, Europe and Latin America to a small range of 0.1%
through 1.5%.
Latin America also is bedeviled with lingering
economic woes. The entire Latin America had a total GDP of
only 0.5% in 2001.
The Caribbean economies also are experiencing
an economic slowdown, with an estimated GDP of 0.8%.
Guyana’s
economy
The sluggish global economy, indeed, has impacted Guyana.
However, critics still have not assimilated the implications
of this slowdown in the world economy. Trade union leaders
making irresponsible demands for wage hikes exemplify only
one of many cases of non-assimilation. Recently in Singapore,
with soaring economic problems manifested by possible considerable
retrenchments in the financial sector and rising unemployment,
the Deputy Prime Minister Lee Hsien Loong called for a sustained
wage restraint. The current economic scene in Guyana requires
some form of wage restraint in the interest nation building.
Despite a sluggish world economy, Guyana’s
economy has shown a fair amount of progress in 2001, as will
now be outlined by a sample of developmental areas:
1. The Guyana Sugar Corporation showed an
increase in the sale of molasses. The price on the world market
was US$80 per tonne as compared to US$30-40 per tonne in 2000.
2. Sterling Products had sales in excess
of $1 billion. This company was ranked among the top twenty
Caribbean corporations.
3. Banks DIH opened a new $130 million drive-through
restaurant outlet on Sheriff Street. This outlet also houses
a $4 million parking facility.
4. BEV Processors and Bounty Farms opened
a new stockfeed plant that produces high protein feed from
fish and chicken waste.
5. Guyana and Brazil have a trade pact that
now enables fresh fruit, bottled rum, plywood, bauxite, and
corrugated cardboard from Guyana to be traded with Brazil
duty free.
6. Western Union, a money transfer company,
has now expanded its operations to 35 locations.
7. Enman Services Ltd., a Trinidad firm,
has signed a Memorandum of Understanding with the Government
of Guyana, to establish a hydropower package at Turtruba (Marshall
Falls). The hydropower capacity is 350 MW.
8. The annual exports of Guyana’s major
commodities – sugar, rice, dried bauxite, molasses,
and timber/plywood – have increased in volume. The
data below is taken from the Bureau of Statistics.
Sugar: |
277
tonnes (2000) |
157
tonnes (1991) |
Rice: |
208 tonnes (2000) |
50 tonnes (1991) |
Dried
Bauxite: |
2,421 tonnes (2000) |
975 tonnes (1991) |
Molasses |
39,776 kg. (2000) |
955 kg. (1991) |
Timber/plywood: |
184 cubic meters
(2000) |
16 cubic meters
(1991) |
9. A number of other positives based on a comparison made
between the first half of 2001 and the first half of 2000
characterize this economy currently. The first half of 2001
showed the following: a higher national income; increase in
earnings by deposit holders; reduced inflation rate; higher
output in forestry, distribution, engineering and construction,
non-durable goods industry, gold, and value added products
in the mining and quarrying sector.
10. Guyana’s consumer price index (134.4)
compared favorably with Jamaica (179.0) and Trinidad &
Tobago (126.0) at March 2001.
11. Major impending physical infrastructural
developments as the Berbice River Bridge, the Takutu River
Bridge, and an upgraded Georgetown/Lethem Road, offer stupendous
commercial horizons for both domestic and foreign trade.
12. The Guyana Sugar Corporation is expected
shortly to activate the modernization of the sugar industry.
13. Major expansions are underway at Prettipaul
Singh’s Investments and DIDCO.
Clearly, the slowdown in the world economy
will impact the imminent Budget Estimates earmarked for the
National Assembly. In this case, Guyanese need to concentrate
on enhancing the economy rather than focusing on inappropriate
wage/salary increases. Some trade union leaders attribute
low wage/salary as the reason for migration from Guyana, and
so urge Government and the private sector to pay higher compensation
for their members. Make no mistake about why people migrate,
and it’s certainly not solely because they have low
compensation. A culture of high migration has become rooted
for more than 30 years in this country, with many people constantly
in the visa pipeline, awaiting the green light to travel to
North America. This pipeline has an average waiting period
of about 8-10 years. Many of these would-be immigrants are
recipients of high compensation. Perhaps, migration today
has become a fashion or trend. This being the case, migration
may not an adequate basis for demanding higher compensation.
The state of the Guyana economy, in the final analysis, must
be the most significant factor in the determination of wage/salary.
Keep in mind that the world economy impacts the local economic
conditions.
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