Dear Editor,
According to a report, “Parrots talk, facts walk’ …Pres. Ali blasts claims govt. spending driving growth,” carried in yesterday’s edition of another daily, the President sought to argue that government spending is unrelated to GDP (or GDP growth). Then he goes on to call those of us who teach national income accounting “parrots” for insisting that the income and expenditure approaches give the same GDP.
His own words confound him: “Government spending is not a production sector. It does not appear in GDP unless a contractor builds, a supplier produces, a worker is employed, or a service is delivered”. But doesn’t government spending precisely result in contractors building, suppliers producing, workers getting employed, services being delivered?!!
It’s called the circular flow of income, Mr. President. Were I to try to understand your confusion, I would say that you are distinguishing between final production/output and the mere “transactions” that result in the production.
Could it be that the President was pointing out that some of the government spending is lost to imports, as GDP only measures domestic production? That would have helped his case, but not by much, because domestic production is already “domestic production”. Subtracting imports ensures that we do not inflate domestic production by our imports of other countries’ output.
The President is probably trying to defend a very clever, but most misleading sentence in the 2026 Budget Speech: “the Guyanese economy expanded by 19.3 per cent overall in 2025, with expansion of 14.3 per cent observed in our non-oil real GDP.” But as this letter is not about this statement, I’ll postpone elaborating on it now.
More to the point, might I respectfully suggest that when it comes to economics, His Excellency might do well to check in with the First Lady, who has a degree in economics, and who was a former student of mine?