The trinidad Guardian / Countries moving through boom and bust cycles can be compared to rags-to-riches, back-to-rags stories.
T&T did well during the era when commodity prices were high and is going through one of its roughest moments in its economic history now that oil prices are well below the US$100 a barrel of five years ago.
The good times during the 1970s, the economic depression of the late 1980s, the boom of Patrick Manning’s second administration and now back to “rags” are all tied to the rise and fall of oil prices.
The United Nations Economic Commission for Latin America and the Caribbean’s (ECLAC) in its end of 2017 report last week gave a summary of where T&T is at this juncture of its economic history.
T&T remains almost at the bottom of the Latin American and Caribbean economic growth table as it is one of the few countries which did not grow in 2017.
The report stated that T&T experienced a 2.3 percent decline in gross domestic product (GDP) in 2017 and will see small GDP growth in 2018 of 0.5 percent.
Local economists gave their views on ECLAC’s report.
Growth projection forecasts
Economist Dr Ronald Ramkissoon supports ECLAC’s view that there could be GDP growth in 2018.
“I expect a modest increase. I think it is reasonable to expect that coming from the energy sector and perhaps some improvement in the capital expenditure,” he told Business and Money.
He warned that these reports are nothing more than forecasts and unforeseen circumstances can modify them.
“They are looking forward and circumstances can change, so that one should not be shocked if you end up with a zero per cent position next year or even marginally negative growth.”
He said based on what is expected of natural gas production and prices remaining where they are, then ECLAC’s projection is “reasonable.”
On the price of oil, he believes it will remain around US$60 in 2018 and does not expect much movement.
“Of course we have our big challenge on the production side in respect of oil. I would think that the late fifties in the kinds of levels that I am seeing. Again forecasts are themselves difficult, often wrong. However at this time it seems reasonable.”
The economies of Latin America and the Caribbean, according tot he ECLAC report, should experience a moderate recovery in 2018, expanding 2.2 per cent next year after recording an average 1.3 per cent growth this year.
He expects 2018 to be another “rough year.”
“My hope is that the population is beginning to accept and to recognise that the T&T economy is not going to come out of this situation anytime soon. There is no magic wand and, as such, we might as well get accustomed to low prices on the energy side and do what we have not done over the last 40 years—diversify the economy.”
Dr Roger Hosein, senior lecturer, University of the West Indies, believes that the GDP growth in 2018 could be much higher than ECLAC’s projections.
“The 0.5 per cent GDP growth projection does not seem to be entirely correct. There have been rapid increases in natural gas production that would fully come on stream in 2018 for the whole year and therefore it is possible that we would see an improvement in overall GDP. Bear in mind that after contractions of 2016 and 2017 it would be easier from that trough for the economy to grow in 2018. As you lift more natural gas the economic growth performance would improve.”
The report stated: “T&T’s economic recession persisted in 2017, with growth estimated at -2.3 per cent. The government continued its fiscal consolidation efforts in 2017 as tax revenue continued to fall. Despite a slight increase in energy revenue, the budget deficit is estimated at 8.4 per cent of GDP, while net public debt had already risen to 62.6 per cent of GDP by September. The external current account balance moved into surplus in the first quarter of 2017, on account of higher energy prices. The weak economic activity was reflected in sluggish private sector lending growth and low inflation. Growth is projected to come to 0.5 per cent in 2018, based on an expected expansion in the energy sector owing to stronger upstream gas supply.”
Inflation remained subdued in 2017, in line with the economic slowdown, and fell from 3.6 per cent in January to 1.2 per cent in September 2017.
Unemployment stood at 3.6 per cent in the fourth quarter of 2016, up slightly from the 3.5 per cent recorded in the year-earlier period.
The report also said that conditions in the foreign exchange market remained tight and commercial banks continued to ration the United States dollars made available to customers in 2017.
Between October 2016 and August 2017, the central bank injected US $1.725 million into the foreign exchange market in order to T&T.
ECLAC predicts growth for T&T
Con Información de The trinidad Guardian
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