World Bank sets Guyana’s GDP at 5.1 per cent this year

Guyana’s Gross Domestic Product (GDP) for this year is projected to be 5.1 per cent, the World Bank said in a report titled Global Economic Prospects . Guyana’s projection is the third highest in Latin America and the Caribbean.

The bank said Haiti will see the highest growth of 8.1 per cent, followed by Peru with 6.1 per cent. Haiti’s growth however is based on aid inflows from developing countries. The report said the Caribbean economy will grow by about 3.6 per cent this year.

Meanwhile, the report stated that developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects.

The bank has lowered its growth forecast for 2012 to 5.4 per cent for developing countries and 1.4 per cent for high-income countries (- 0.3 per cent for the Euro Area), down from its June estimates of 6.2 and 2.7 per cent (1.9 per cent for the Euro Area), respectively.

Global growth is now projected at 2.5 and 3.1 per cent, using purchasing power parity weights, global growth would be 3.4 and 4.3 per cent for 2012 and 2013, respectively.

Countries in Latin America and the Caribbean (LAC), in particular, are expected to grow 3.6 per cent in 2012, and 4.2 per cent in 2013. Weaker global growth, uncertainty arising from the Euro Area debt crisis, slower growth in China, and a policy-induced deceleration in domestic demand are weighing on growth prospects.

Brazil’s economic growth came to a halt in the third quarter and growth is forecasted to be 3.4 per cent in 2012, up slightly from 2011 but well below the 2010 growth of 7.5 per cent.

Several countries in the region could be hard hit, if international commodity prices were to weaken sharply.

Slower growth is already visible in weakening global trade and commodity prices. Global exports of goods and services expanded an estimated 6.6 per cent in 2011 (down from 12.4 per cent in 2010), and are projected to rise by only 4.7 per cent in 2012.

Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10, 25 and 19 per cent respectively since recent peaks in 2011. Declining commodity prices have contributed to an easing of headline inflation in most developing countries. Although international food prices eased in recent months, down 14 per cent from their peak in February 2011, food security for the poorest, including in the Horn of Africa, remains a central concern.

Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time, said World Bank Chief Economist and Senior Vice President for Development Economics, Justin Yifu Lin. Developing countries have less fiscal and monetary space for remedial measures than they did in 2008/ 09. As a result, their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply.

According to World Bank Chief Economist for Latin America and the Caribbean, Augusto de la Torre, it is still unclear how much the current Euro-zone debt crisis will impact the region.

If Chinese growth remains strong and global liquidity and commodity prices remain relatively high, the region should continue to enjoy solid if somewhat slower growth. Sustaining and raising long term growth will require continued emphasis on investment and productivity enhancing policies, said de la Torre.

In a catastrophic scenario where elevated risk aversion shuts down credit and stalls capital in-flows to emerging markets, China becomes unable to fully offset a decline in its exports, and commodity prices drop, Latin America and the Caribbean would need to activate all available shock absorbers to protect its hard-won social gains.