ECLAC projects 4.8 % economic growth for Guyana in 2012

The United Nations Economic Commission for Latin America and the Caribbean ( ECLAC) has projected a growth rate of four per cent for Guyana next year, saying this will be driven mainly by buoyant commodity prices and increased production of gold, bauxite and alumina, along with agricultural crops such as rice and sugar.
ECLAC said too that the ruling party’s reduced majority in Parliament could affect the growth in credit to the private sector, saying that the situation will create uncertainty as to whether the government will be able to maintain all aspects of its policy agenda. These observations are contained in ECLAC’s Preliminary Overview of the Economies of Latin America and the Caribbean 2011.

However, in the report, ECLAC said the Guyanese economy continued to post robust growth in 2011, despite the continuing difficulties in the major export markets of the United States and Europe. The estimate for 2011 is for overall growth of 4.8 per cent, while the forecast for 2012 is for an expansion of four per cent. According to ECLAC, policymakers in Guyana are expected to pursue the Low Carbon Development Strategy ( LCDS) in light of the victory of the ruling party at the polls in November, despite a much- reduced majority in Parliament. Under the agreement with the government of Norway for the joint implementation of this strategy, Guyana will receive some US$ 30 mil lion in financing in 2012 and up to US$ 100 million annually through 2020.

In 2011, ECLAC said the fiscal deficit will widen due to higher capital outlays. The budget deficit is an ticipated to be 3.5 per cent of Gross Domestic Product ( GDP) in 2011, but may be as high as six per cent in 2012, due especially to the investment in the Amaila Falls hydroelectric project. In the first half of 2011, some US$ 32.2 million in debt relief was received through the Multilateral Debt Relief Initiative; the International Monetary Fund ( IMF); the International Development Association; and the Inter- American Development Bank ( IDB). Debt servicing will be higher in 2012, and the debt- to- GDP ratio will also increase due to borrowing for investment purposes.