Guyana Economy Doing Better Than Barbados-2009!

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Guyana Economy Doing Better Than Barbados-2009!

Saturday, 14 Nov 2009

Commendable performance of the economy under current circumstances The financial crisis which has gripped the world has sent shockwaves across the major economies of the world and has had rippling effects across the developing world as development aid and forms of assistance has significantly dried up and many countries are still struggling to recover from the impact of the massive increases in food prices which occurred only a year ago and earlier skyrocketing fuel prices.
According to Wikipedia the financial crisis of 2007–2009 has been called by leading economists the worst financial crisis since the one related to the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. Many causes have been proposed, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy.

The collapse of a global housing bubble, which peaked in the U.S. in 2006, caused the values of securities tied to housing prices to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence caused a ripple effect in global stock markets, which suffered large losses during 2008.

Economies worldwide slowed in late 2008 and early 2009 as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets. Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailouts.

The crisis in U.S. financial markets is raising uncertainty and dampening growth prospects around the world, but the IMF still expects a gradual economic recovery during 2009, IMF Managing Director Dominique Strauss-Kahn said.

Speaking in Jeddah, Saudi Arabia, after the latest U.S. action to stem the worsening crisis on Wall Street, Strauss-Kahn said that the financial turmoil was very serious and other major financial institutions could be expected to face trouble.

"The consequences for some financial institutions are still in front of us. We have to expect that there may be in the coming weeks and coming months other financial institutions with some problems," he told reporters.

The financial crisis would have repercussions for the global economy that is already in a slowdown. But Strauss-Kahn saw resilience in developing countries, aided by falling oil prices. "What is important to see is that it has an influence on the real economy but that the real economy is resilient both in developed and emerging countries."

While Guyana has not escaped from the repercussions of the financial crisis a sound macro-economic architecture which has been formulated over recent years has certainly helped to minimise the effects on our economy.

Only recently President Jagdeo drew attention to the fact that while many of our regional counterparts have instituted a wage freeze we are still granting wage increases and in this regard he assured that the public sector will receive an increase for this year.

Notably too Finance Minister Dr. Ashni Singh, in a mid-year review tabled in the National Assembly on Thursday said that at the end of the reporting period, the non-sugar economy recorded positive growth, with expansion in output reflected across a broad base of sectors, pointing out that the Guyana economy has withstood challenges from the continuing global economic downturn and modest growth is projected by the end of the year.

This result undoubtedly demonstrated early returns to the government’s efforts at diversification, with the strongest rates of growth achieved in non-traditional agriculture sub-sectors. That notwithstanding, difficulties were encountered in some traditional sectors…on balance, the economy is still projected to achieve positive growth at the end of the year and continued macroeconomic stability is expected to be maintained,” the Finance Minister declared.

Of special note is the fact that the economy is projected to show a positive a growth for this year of 2.7% albeit a reduction from the projected 4.7% originally predicted. But under the current circumstances this is understandable and feather in the cap of those who are responsible for the management of the economy as well as the business sector which has continued to show confidence in the national economy.

Of course this positive news will be like poison for few among us but certainly welcome by the vast majority of Guyanese.

Source: Guyana Chronicle, November 14, 2009.
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