ECLAC projects 4.8 per cent growth for Guyana this year

Guyana’s growth rate is projected at 4.8 per cent according to a new report launched by the Economic Commission of Latin America and the Caribbean in Chile on Wednesday. Meanwhile, as a whole, Latin American and Caribbean countries will grow by three per cent in 2013, which is similar to last year’s growth rate, according to the report.
In the survey, ECLAC states that the lower growth rate than the most recent estimate (3.5 per cent in April) was partly due to slow growth in Brazil and Mexico. In addition, several countries that were growing quickly – such as Chile, Panama and Peru – experienced a slowdown in economic activity in recent months.
High dependency
The report adds that the region has some weaknesses that could affect it in the short and long term, given the current negative external environment. Such weaknesses include the high dependency on exports to Europe and China, a growing current account deficit (reaching two per cent of GDP in 2013, which is the highest level since 2001), major fiscal constraints in the Caribbean, Central America and Mexico, and South American vulnerability due to its dependence on natural resources.
Furthermore, economic growth remains largely dependent on consumption, which in 2013 has expanded less than in the previous year.
Meanwhile, the contribution of investment to GDP will be modest, and net exports will make a negative contribution owing to the larger increase in imports than exports. Exports were down in the first half of 2013, and are probably facing the end of the boom period in commodity prices.
According to ECLAC Executive Secretary Alicia Bárcena, who presented the document, “the current situation highlights problems of growth sustainability in most of the region’s economies, hence, the need to broaden and diversify sources of growth. We also need a social covenant to increase investment and productivity, as well as changing production patterns to grow with equality”.
Moderate growth
The region’s moderate economic performance is linked to estimated world economic growth of 2.3 per cent (which is a similar rate to 2012). Owing to the ongoing recession in the euro zone during 2013, developing countries are expected to remain the drivers of world economic growth (although policies adopted by the United States and Japan are expected to boost these economies and promote greater worldwide economic growth in the coming year).
According to ECLAC estimates, Paraguay leads growth in 2013, with a 12.5 per cent rise in GDP, followed by Panama (7.5 per cent), Peru (5.9 per cent), Bolivia (5.5 per cent), Nicaragua (five per cent) and Chile (4.6 per cent). Argentina is expected to grow by 3.5 per cent, Brazil by 2.5 per cent and Mexico by 2.8 per cent.
Central America should grow by four per cent, while South America is expected to grow by 3.1 per cent.
The Caribbean is expected to maintain the slow upward trend in growth observed in previous years (to reach two per cent). In the first six months of 2013, prices for many of the region’s exports dropped, particularly minerals, metals, oil and some foodstuffs. This trend is associated with the euro zone recession and the slowdown of growth in China.
In 2013, export values are expected to rise by around four per cent, which is higher than the 1.5 per cent growth recorded in 2012 but much lower than the rates above 20 per cent observed in 2011 and 2010. Imports are expected to grow by six per cent in 2013 (compared with a rise of 4.3 per cent in 2012).
As a result of the region’s moderate economic growth, labour demand is not expected to rise significantly in 2013. Unemployment dipped from 6.9 per cent to 6.7 per cent in the first quarter of 2013, while 12-month cumulative regional inflation to May 2013 stood at six per cent (compared with 5.5 per cent in December 2012 and 5.8 per cent in the 12 months to May 2012).
Boost investment
In the Economic Survey 2013, ECLAC analyses economic growth in recent decades and presents proposals to boost investment and productivity, with a view to achieving more stable and sustainable growth in the future. While this period has seen profound economic transformations in Latin America and the Caribbean, levels of inequality and poverty remain high in many countries. Despite the positive terms of trade, capital accumulation has been in sufficient and there have been limited gains in labour productivity.
The report highlights the need for robust institutions and social covenants to encourage investment, including short-term macroeconomic policies with a stabilising and countercyclical effect, as well as long-term macroeconomic policies linked with industrial, social, labour and environmental policies, all with a view to promoting sustainable structural change and greater productivity.