Is Guyana’s economy overheating?

TheeconomyofGuyana has enjoyed a sustained period of economic growth. Real GDP growth has been increasing for more than a decade.

However,inrecentyears, andwiththediscoveryofoil, G D P g r o w t h h a s skyrocketed. In 2020, when oil production commenced real GDP growth increased bymorethan40%;in2021it was almost 20%; and last year, it surpassed 56%. But during these years of spiraling growth, inflation has become a problem. Last year,theannualinflationrate was recorded at 7.2%. The government offered public servantsan8%increase.

There have always been questions marks over the official inflation rate. The reality on the ground is that the prices for food, rent and construction have surged And these are signs that the e c o n o m y m a y b e o v e r h e a t i n g T h e government, of course likes to downplay these factors. But housing rentals are now out of the reach of the poor Someastonishingrentalsare beingdemandedbyproperty owners. The poor are being pushedincreasinglytowards squatting and towards the suburban areas, and even there housing rentals are unaffordable.

The situation is made worse by the bourgeoisie class buying up real estate like if they are shopping cupcakes Residential premises are being allowed to be converted almost withoutquestioninbusiness p r e m i s e s t h e r e b y aggravating the shortage of housing units for rentals in urban areas Like the proverbial ostrich, the government claims that its housing programme is allowing more low-income persons to own their own homes It points to the qualification ceiling for low interest, low-income loans beingincreasedfrom$8Mto $20M. It also points to the removal of taxes on constructionmaterials.

But the government is only deluding itself. It has not done its homework and has failed to see to what extent the prices of construction materials have declined as consequence of the removal of taxes. Even with the supply chain crisis coming to an end, construction costs continue to soar The price of cement ofnow$1700persack,steel prices are high and stone is tradingat$12000pertonand that is if you can source supplies. This is increasing the cost of housing and placingitoutofthereachof the poor The rising construction costs points to an economy that is overheating, especially the construction sector Poor people cannot build a house for$8Mattheseprices.And while the ceiling for low-

Dem Boys Seh...

income mortgages has now increased to $20M, poor people cannot afford the monthly mortgage payments The so-called low-income interest measure is benefitting middleincomeearnersmore than low-income persons. Traditionally, roads were built with asphalt and bitumen But now the contractors cannot wait to sourcebitumenandsomany community roads are being builtwithconcrete.Thiswill further push the price of cement and ready-mix upwards.

But the situation is becoming worse. Labour is nowaproblem,bothinterms of supply and price Employers are complaining about an acute shortage of workers. And this will push labour prices further up, unless labour is imported. Labourers working on construction sites are now demanding$10,000perday And they are working no more than 7 hours per day Skilled carpenters are demanding $12,000 and more. Imagine what this is doingtothepoormanwhois trying to construct his lowincome home. The signs of an overheated economy cannot be overlooked. The government financial gurus have failed to control the pace of development. They have mistakenly treated the economy as having an endless supply of workers