Nadaleen Singh

T&T will be af­fect­ed by the in­sta­bil­i­ty and volatil­i­ty caused by Britain's vote to leave the Eu­ro­pean Union. That is the view of two for­mer fi­nance min­is­ters who said this coun­try could feel the ef­fects as the ref­er­en­dum has al­ready sent glob­al stock mar­kets in­to a tail spin.

Win­ston Dook­er­an, who served as Fi­nance Min­is­ter in the Peo­ple's Part­ner­ship ad­min­is­tra­tion of Kam­la Per­sad-Bisses­sar, said there could be reper­cus­sions from po­lit­i­cal un­cer­tain­ty re­sult­ing from the de­vel­op­ment. Mar­i­ano Browne, who held the port­fo­lio in the Peo­ple's Na­tion­al Move­ment regime of Patrick Man­ning, ex­pressed con­cern about the ef­fect on this coun­try from tur­moil in world mar­kets.

Dook­er­an told the T&T Guardian while there might not be a short-term im­pact, "in the medi­um to long-term there could be a sit­u­a­tion where the UK econ­o­my would have to find a new place for its own re­cov­ery."

"A frag­men­ta­tion process could emerge, giv­en the pol­i­tics of the sit­u­a­tion. In that sense there is go­ing to be a high lev­el of po­lit­i­cal un­cer­tain­ty in the ma­jor coun­tries in Eu­rope."

Dook­er­an said British na­tion­als are re­act­ing to dis­con­tent and to some ex­tent "have blurred the log­ic of their own fu­ture." He is predic­ing that the im­pact on T&T and oth­er coun­tries in the Caribbean may be from de­pre­ci­a­tion in ex­change rates and mar­ket volatil­i­ty.

"There is go­ing to be un­cer­tain­ty in Eu­rope and that is go­ing to af­fect the tourism mar­ket. Peo­ple are go­ing to–for some time in the short-term–try to see if they can re­gain some con­fi­dence be­fore they start trav­el­ling," he said.

Dook­er­an said he was sur­prised by the out­come of the vote but not­ed a "lev­el of dis­con­tent" in glob­al de­mo­c­ra­t­ic pop­u­la­tions, re­sult­ing in changes in the Unit­ed States, Aus­tria and the Phillip­ines.

Browne said trends show that in­vestors pre­fer or­der and cer­tain­ty, so there is the pos­si­bil­i­ty of weak­er eco­nom­ic growth in the EU and the UK which is "not a pos­i­tive de­vel­op­ment for world growth."

He said T&T has to be con­cerned about the im­pact of Brex­it on the price of oil and gas. He said any hint of a re­ces­sion in the UK "will lead to a de­cline in mar­ket prices and there­fore our for­eign ex­change earn­ings and a wors­en­ing in our cur­rent ac­count po­si­tion."

Browne said be­cause the TT dol­lar is pegged to US cur­ren­cy, "any move­ments will be re­flec­tive of com­par­a­tive move­ments in the US dol­lar."

He ex­plained: "The US dol­lar is the world's re­serve cur­ren­cy and more than 80 per cent of the world's re­serves are de­nom­i­nat­ed in US dol­lars. As such we can ex­pect a flight to qual­i­ty–sale of oth­er cur­ren­cies, for ex­am­ple the pound ster­ling and Eu­ro–and there­fore ap­pre­ci­a­tion in US.

"All things be­ing equal we can ex­pect the TT dol­lar to strength­en against ster­ling and Eu­ro and re­main rel­a­tive­ly un­changed against the US.

Browne said while Caribbean coun­tries trade with the UK, that coun­try is not a dom­i­nant trad­ing part­ner. This is main­ly a US dol­lar re­gion so there should not be much dis­lo­ca­tion with trade.