Latest update March 28th, 2024 12:59 AM
Oct 05, 2015 Features / Columnists, Peeping Tom
There has been no economic recession in Guyana. There is no negative growth in the economy; there has been a slowdown in business activity ever since the APNU/AFC government came to power.
The economy has not stopped growing. It grew in 2014 and it grew in the first half of this year. The PPPC therefore cannot be blamed for the present crisis in the business community.
The economy has grown at a slower rate, but it is still growing. This is not a novel phenomenon. Economies always grow at different rates over different periods. China, which has enjoyed economic growth for the past two decades, has seen its growth rate dip; but it is still growing.
The problem with the economy in Guyana is that the business community, including very small businesses, is reporting that sales are poor. People are not buying as much as they ought to be buying. There is a contraction in business activity.
The problems in rice, sugar and gold cannot be lumped together and blamed for the slowdown. Rice prices during 2014 were at their highest ever. There has been a fall off, but rice production has more than compensated for this fall off in the price for rice. The decline in the sugar and gold production has not led to a negative growth in the economy. Rice production in fact has ensured that there remains positive growth.
This has always been the trend in terms of commodity production and prices. Falling production and prices of some commodities was compensated for by increased production and export prices of others. Thus, while some sectors may have declined, the overall economy dipped.
The contraction in business activity therefore cannot be laid at the contraction in production of certain sectors because the economy continues to grow. It is not sure though whether it will register growth for the last half of this year.
The new government has not done a proper diagnosis of the problem. It has sought refuge in the excuse that the contraction in business activity began with the PPP, and it has supplemented this excuse with another, to wit, that certain sectors in the economy contracted under the PPP beginning in 2014. If it did its research, it would see that even before 2014 there was contraction of certain sectors, yet growth was sustained.
The decline in business activity is a product of a decline in spending, not necessarily growth.
The contraction in business represents a loss of confidence in the economy. It is suggestive that the business class does not have confidence in plans and policies of the government.
The business class in Guyana is like some political leaders in Guyana. It is infatuated with itself.
The business class wants to be treated royally because it believes that it is royalty. Governments on the other hand are usually more interested in demanding loyalty rather than treating the private sector as royalty.
The slowdown of business activity reflects a lack of confidence by the business community in the management of the economy and not necessarily in the government. The same business class has no problems with either the AFC or APNU because they found close to 1.4 billion dollars to fund the campaign of these two parties. The problem is not AFC or APNU. It is just they lack confidence in the economic policies of the government.
They lack this confidence because they have seen very little so far in terms of policies to boost private sector growth and development. The 2015 Budget advanced no measures that the ‘royal” class will view ecstatically.
In fact, the government’s confrontations with deals made by the previous administration with Chinese companies and its dumping of major projects planned by the former administration may have created apprehensions within the business class that the government may be anti- business.
These perceptions would have led to a reaction from the business community and it is this reaction that has created loss of confidence in the economic policies of the government.
The business class is not flexing its muscles. It has little to flex. It is being cautious.
The good news is that Christmas is around the corner and things are likely to improve but unless there is confidence by the business class in what the government is doing economically, the same business deceleration is likely to be repeated.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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