Summary
The Global average inflation rate slowed to 6.8% in 2023, down from 8.7% in 2022, and estimated to slow to 5.8% in 2024.In 2022, many other countries were still experiencing double and triple digits inflation. The World Economic Forum reported that inflation rates have doubled in 35 out of 44 advanced countries over the past two years.
In the case of Guyana, theinflation rate remained in the low single digit. In 2023, for instance, the inflation rate slow to 2%, below the estimated 5% (earlier in the fiscal year) for the year 2023, with an estimated 2.5% in 2024; thus remaining below the global average (5.8%). As evidently demonstrated herein, the cost-of-living interventions pursued by the Government of Guyana, aimed at combating rising prices, amounts to an estimated $332.2 billion annually, representing 8.5% of GDP. More importantly to note is that in contrast to other countries around the world, Guyana has confronted rising prices in a far more comprehensive manner than other larger, advanced economies, such as the United States (1.7% of GDP), Japan (2.4% of GDP), Chile (0.7% of GDP), Indonesia (0.12% of GDP), Malaysia (4.2% of GDP), and Saudi Arabia (0.5% of GDP).
Introduction
Sections of society and the media continue to be critical of the Government of Guyana (GoG) in their handling of the cost-of-living situation, calling on the Government to do more in this regard. However, to date, a relatively in-depth global perspective on how other countries in the world are coping with the rising cost of living, has been absent, save and except for “high level” perspectives. This is an important perspective to have in order to appreciate the gravity of the interventions by the GoG in response to the rising costs domestically and other measures that the GoG is pursuing to address this situation in the short, medium, and long term.
Discussion and Analysis
Global Perspective (Select Countries)
According to the International Rescue Committee (IRC), one of the most severe inflation crisis has led to economic collapse in Lebanon, with an increasing number of people unable to afford their cost of living. Since 2019, Lebanon’s GDP has shrunk by 40%, while consumer prices continue to soar, reaching inflation rates of 170% for the year 2022. Prices for goods have risen, while the value of wages have fallen.
Countries with highest inflation rates since the pandemic
- Zimbabwe – 314.5% (2023 est. 193%)
- Venezuela – 360% (2023 est. 187%)
- Lebanon – 171% (2023 est.?)
- Sudan – 257% (2023 est. 139%)
- Argentina – 122% (2023 est. 72%)
- Turkey – 51% (2023 est. 72%)
- Suriname – 53% (2023 est. 52%)
- Islamic Republic of Iran – 47% (2023 est. 46%)
- Sri Lanka – 45% (2023 est. 29%)
- Ethiopia – 29% (2023 est. 34%)
- Ghana – 43% (2023 est. 32%)
- Yemen – 15% (2023 est. 30%)
- Moldova – 13% (2023 est. 29%)
- Angola – 13% (2023 est. 21%)
- Estonia – 10% (2023 est. 19%)
The Global average inflation rate slowed to 6.8% in 2023, down from 8.7% in 2022, and estimated to slow to 5.8% in 2024.In 2022, many other countries were still experiencing double and triple digitsinflation rates as shown above. The World Economic Forum reported that inflation rates have doubled in 35 out of 44 advanced countries over the past two years.
What governments are doing around the world to confront the rising cost of living (Selected Countries)
- Cost of Living measures in the United States amounted to the US$430 billioninflation reduction Act announced in August 2022, representing 1.7% of GDP.
- Chile announced a US$1.2 billion aid plan including labour subsidies and one-time payments of US$120 for 7.5 million(US$900 million) of its 19 million residents. Thus, the total intervention amounted to US$2.1 billion or 0.7% of GDP(2022).
- In Japan, the cost-of-living response measures implemented by the Government amounted to US$103 billion in 2022, representing 2.4% of GDP.
- Indonesia reallocated US$1.6 billion of its fuel subsidy budget to welfare spending, an amount that represented 0.12% of GDP.
- Malaysiaexpended US$17.25 billion, 2% of GDPin subsidies and cash aid to temper the effects of rising prices.
- Saudi Arabia raised welfare spending to US$5.33 billion, representing 0.5% of GDP.
Cost of Living Measures Implemented in Guyana
In the case of Guyana, theinflation rate remained in the low single digit.In 2023, for instance, the inflation rate slow to 2%, below the estimated 5% (earlier in the fiscal year) for the year 2023,with an estimated 2.5% in 2024;thus remaining below the global average(5.8%) as well.
Further, altogether, thecost-of-living measures implemented in Guyana,amounts to an estimated $332.2 billion annually or US$1.6 billion, or 8.5% of GDP.
Conclusion
As evidentlydemonstrated herein, the cost-of-livinginterventions pursued bythe Government of Guyana,aimed at combating rising prices, amounts to an estimated $332.2 billion annually, representing 8.5% of GDP.More importantly to note is that in contrast to other countries around the world, Guyana has confronted rising prices in a far more comprehensive manner than other larger, advanced economies, such as the United States (1.7% of GDP), Japan (2.4% of GDP), Chile (0.7% of GDP), Indonesia (0.12% of GDP), Malaysia (4.2% of GDP), and Saudi Arabia (0.5% of GDP).