By Kiana Wilburg
Former Auditor General Anand Goolsarran believes that the 2.1 percent growth rate for the Gross Domestic Product (GDP) in 2017 is a cause for grave concern and warrants reflection by policy makers.
In his recent writings, Goolsarran recalled that in the 2017 Estimates, the GDP growth rate was pegged at 3.8 percent. It was adjusted downwards to 3.1 per cent in the 2017 Mid-year Report and then to 2.9 percent at the time of the preparation of the Estimates for 2018.
Goolsarran noted that Finance Minister Winston Jordan had attributed this significant decline in GDP to lower than expected outputs in mining and quarrying, the construction sector, sugar and livestock. The Chartered Accountant highlighted the fact that the said performance was significant enough to offset increased performance in other areas of agriculture, fishing, forestry, mining and services sectors.
Goolsarran said, “The decrease of 38.7 percent in the GDP growth in 2017 is, however, a cause for serious reflection by policy makers. Were there enough fiscal incentives to enable the productive and service sectors to perform so as to achieve the desired growth rate? Or were there other factors, such as adverse weather conditions, which affected the productive capacity of the economy?”
He added, “The 2018 Estimates indicate a forecast GDP growth of 3.8 percent. Is this forecast not an over-estimation, having regard to our economic performance in 2017, global economic trends and internal factors, to which the Minister referred in his Budget Speech?”
Goolsarran also questioned whether one is likely to see a downward revision in the 2018 Mid-Year Report. In this regard, he pointed out that there are already reports in the media where the Finance Minister at the latest meeting of the Caribbean Development Bank, said that the projected GDP growth rate for 2018 has been lowered to 3.4 percent. This represents a .4 percent decline in the projected growth rate.
Goolsarran emphasized, however, that there was no mention of this in Jordan’s End of Year Report for 2017 which was laid in the Parliament on April 12.
REAL SECTOR PERFORMANCE
According to the 2017 End of Year Report, the improvement in agriculture, fishing and forestry was due significantly to better production in particularly the rice and forestry industries. Finance Minister, Winston Jordan noted that this resulted in the upward revision of growth in each industry by 5.3 percentage points and 16.3 percentage points respectively. Jordan said that this was well above projections at the time of the 2018 budget.
Jordan said that the turnaround in the forestry industry was due to a significant increase in logs harvested in November and December last year by small concession holders. The economist said that notably, the share of small concession holders within the sector grew to a high of 58 percent in 2017.
Contrary to Goolsarran’s view, Jordan believes that the increases in rice and forestry output were sufficient to offset the contractions in the sugar and livestock industries.
As for the mining and quarrying sector, the Finance Minister said that the decline in bauxite production was lower towards the end of 2017, when compared to the same period in 2016. He said that this resulted in an improved position compared to the original projection.
Jordan noted however that this outcome was dwarfed by significantly lower declarations in the gold industry and other mining.
The Finance Minister stated that gold declarations maintained a steady performance in the first three quarters of 2017, when compared with the same period in 2016. He noted, however, that gold declarations plummeted in the last quarter of 2017 over the same period of 2016.
He said, “Among problems experienced by the two foreign-owned companies were lower grade ore and unscheduled maintenance. In the case of small and medium scale miners, the decline was due to multiple factors, including higher fuel prices and deteriorated roads. The decrease in other mining was due to 62.7 percent lower declaration of diamonds, the lowest level since 2012.”
As for the manufacturing sector, Jordan said that this sector benefitted from the significant improvement in rice production. He said that this sector also grew by .4 percent. He noted however that the growth was limited by a substantial decline in sugar manufacturing. He said, too, that other manufacturing performed in line with projections.
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