GEISHA KOWLESSAR-ALONZO
geisha.kowlessar@guardian.co.tt
Economist Dr Marlene Attzs said yesterday that she is cautiously optimistic at the latest forecast by the International Monetary Fund (IMF) for T&T.
In an interview with Guardian Media yesterday, Attzs noted that the IMF suggested that real GDP growth will accelerate from 1.6 per cent in 2024 to 2.4 per cent in 2025.
She said that this projected growth, while moderate, may be interpreted as a potential recovery or stabilisation after the challenges this country faced in recent years,
particularly given the global slowdown in energy demand, the COVID-19 pandemic and other external shocks to which T&T was vulnerable.
"The consumer price inflation projections suggesting 1.3 per cent inflation rate in 2024 and 1.9 per cent in 2025 also indicate that inflation is expected to remain relatively low and stable, which one may interpret to be some degree of control over domestic price pressures, meaning that domestic prices have not been increasing but rather have been more or less stabilising.
"But notwithstanding what the data may show in terms of these relatively low inflation rates, this is not the reality of many of the population as people continue to grapple with higher prices all around, particularly in relation to food prices," Attzs explained.
She further noted that there is also some positivity coming out of the IMF in terms of the country's current account balance, which the organisation is projecting to be at 5.5 per cent in 2024, increasing to 7.2 per cent in 2025. That, for all intents and purposes, reflects a healthy surplus on T&T's international transactions with the rest of the world.
However, Attzs warned given that this country is a major exporter of oil, natural gas and petrochemicals and production from the energy sector has been in decline, adding that this surplus may be alluding to non-energy exports.
Commenting further on the IMF's report, the development economist said, "Overall, the IMF gave the country a positive, albeit a moderate outlook, with stable growth and inflation alongside a healthy current account balance."
However, she again maintained that these projections still reflect the country's heavy dependence on the volatile energy sector and diversification of the economy remains critical to mitigate risks that may arise from fluctuating energy prices to ensure long-term sustainable growth.
Additionally, Attzs said the projected growth rates may not be sufficient to address some of the country's structural challenges, including things like high unemployment and underinvestment in non-energy sectors.
"We also need to be mindful that any, and I mean any, significant event in the global economic space could impact energy demand and, in turn, negatively impact T&T's growth prospects.
"So we need to look at moving away from our heavy reliance on the energy sector, even as we accept that energy will continue to be a significant part of T&T's economic profile for the foreseeable future. We need to make concerted efforts to move away from that over-reliance on the energy sector and promote growth in other sectors while maintaining a sustainable fiscal framework, rationalising transfers and subsidies so that we can move to a space where we can improve T&T's resilience to global shocks and ensure long-term growth and sustainable development for the people of T&T," she stressed.
Also commenting economist Dr Vaalmikki Arjoon agreed that while it is encouraging the country is experiencing positive growth since 2022, this is after an extremely weak performance because of the pandemic.
"And after you hit rock bottom there is only one place to go, that's up. So it will really be more intuitive for us to compare ourselves to where we were in the immediate pre-pandemic period and this will show that we are still 6.1 per cent lower than where we were at 2019. So, we still have a lot of catching up to do and the way to do this is to remove the obstacles in the way of doing business as much as possible," he advised.
