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This is the conclusion of the Caribbean Development Bank (CDB).
Says the Bank in its 2002 annual report:
“Notwithstanding positive real economic growth resulting from gains in a few critical sectors and progress in effecting necessary structural reforms, 2002 was an extremely challenging year for Guyana. The rapid upsurge in criminal activity to unprecedented levels served to dampen aggregate demand through a marked erosion of both consumer and investor confidence. The crime factor which was perhaps the single most significant development for the year translated into a weaker-than-forecast overall fiscal position and served to fuel economic uncertainty. The monetary sector, which exhibited greater consolidation, was characterized by sluggish credit demand reflecting the underlying weakness in the economy.”
The CDB said the outlook for Guyana’s economy still remains uncertain, but in the real sector efforts to modernize and rationalize sugar production should serve to strengthen the industry’s likelihood of survival in a post-preference environment. In addition, the planned investment in the bauxite sector will boost economic activity in the near to medium term.”
On the other hand rice, manufacturing and forestry may face intense challenges from an increasingly liberalized international market, the Bank noted.
Initial estimates indicate that output in the real sector grew by 1.1% in 2002, which was appreciably below the 1.9% in 2001. Growth was mainly due to a sharp increase in sugar output as well gains in livestock production and the transport and communication sub-sector.
Sugar production rose by 16.4% to 331, 069 tonnes, while livestock output grew by five percent a result of new investments coupled with increased market protection arising from the introduction of higher tariff during the year.
Rice output contracted by an estimated 10.7% in real value-added as rice production dropped to 287,755 tonnes in 2002 compared with 323, 310 tonnes in 2001, despite critical state support through the provision of commercial bank debt-reduction package for targeted producers. The performance reflected an erosion of producer base as the number of hectares cultivated declined from 112, 412 tonnes in 2001 to 108, 815 in 2002, the Bank said.
The mining and quarrying sub-sector contracted by about 6.1%, and was particularly hit by ongoing efforts to restructure the bauxite industry and by a slump in gold output as a result of reduced activity by OMAI. Total bauxite production fell by 18.9% to 1, 630, 244 tonnes, representing the second consecutive year of double-digit contraction, the Bank noted.