The Bureau of Statistics has released revised Gross Domestic Product (GDP) estimates, which rebases the National Accounts to 2006 prices.
This was announced by Finance Minister Dr Ashni Singh during his 2010 Budget presentation Monday.
The GDP is one the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period. Estimates of GDP in Guyana have been revised significantly upwards, going back to the year 2006 (the new base year) on scales ranging from 70% – 80% higher than previously reported estimates.
The National Accounts have been rebased to 2006 prices, and this rebased framework and well as the new CPI was introduced at the start of this year.
Dr Singh said that one of the principal indicators of an economy’s performance, its growth rate, is measured through the instrument of the National Accounts which are prepared relative to a particular reference or base year. Prior to the current rebasing, the base year for Guyana’s National Accounts was 1988.
“As time advances further from the base year, there is increased likelihood of measuring with error the current period’s level of growth, particularly by underestimation, and likewise of measuring with error other components of the National Accounts,” Singh stated.
Among the reasons for this is the fact that the base year reflects the relative price and cost structures that obtain in that year, and these become progressively less relevant for calculating volumes of output and for estimating value added, particularly for those sectors whose output might not be directly observable or measurable. In addition, new products, technologies, and industries which did not exist at the time of the base year result in economic activity which, at best, is only captured in a very limited manner over time.
Singh said that it was for these reasons that the United Nations Statistics Division has recommended that the base year be reviewed and changed in a time frame of 5 to a maximum of 10 years for those countries which can afford to do so.
In addition, from a regional perspective, the Standing Committee of Caribbean Statisticians has adopted a resolution urging all CARICOM Member States to revise their National Accounts series to a base year not earlier than year 2000, in order to effect closer harmonisation and more meaningful comparison across CARICOM economies, especially as the region moves towards a Single Market and Economy.
Against this background, Guyana’s Bureau of Statistics undertook to rebase the National Accounts. The Bureau conducted a National Economic Survey of Business Establishments in 2008. Data collected from the latter survey, along with national consumption estimates derived from data gathered in the 2006 Household Budget Survey, provided the critical inputs for the rebasing exercise.
Because of the rebasing, Guyana’s National Accounts has had a number of relatively predictable outcomes, Singh stated. For example, health and education will now be measured as separate industries and not as part of Government.
Also, as a result of previously excluded economic activities now being captured by the rebased framework, and more accurate measurement of current rather than historical contribution by each sector, the rebasing has resulted in a reweighting of each sector’s relative contribution to the GDP.
As a result of the rebasing to year 2006, the estimated weight of agriculture, fishing and forestry and of Government have declined, while the weight of mining and quarrying, manufacturing, and services have increased.
Further, consistent with the experience in most countries that have undertaken a similar exercise, the rebasing has resulted in an upward revision in the estimates of nominal GDP, arising from the increased coverage and improved measurement.
In Guyana’s case, prior to the rebasing being brought into effect, Guyana’s GDP at market or purchaser prices for 2010 would have been estimated at $268.5 billion.
The rebasing having been effected, Guyana’s GDP at market or purchaser prices for 2010 is now estimated at $448.1 billion, some 66.9 percent higher.
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