T&T should brace for more economic troubles –at least for the next ten years, says local economist Dr Dhaneshwar Mahabir.Dr Mahabir's gloomy warning comes on the heels of the Central Bank's statement that the country's Gross Domestic Product (GDP) would not achieve the projected growth of two per cent this year, but will instead be flat, or at best, achieve a one per cent growth. ]
The information, contained in the Central Bank's October Monetary Policy Report, was released by Central Bank Governor Ewart Williams during Thursday's news conference at the Eric Williams Financial Complex, Independence Square, Port-of-Spain.Mahabir said he was not optimistic that T&T would recover "anytime soon" and stated that the local economy would continue to experience a period of secular decline, as the global financial downturn was negatively affecting energy prices.
He said, "While we have maybe ten years worth of natural gas, we have very low prices for gas and while we have seen a recovery in oil prices we have very little oil production...I predicted that we would have to be prepared for stagnation for a period of approximately ten years.
Two years have gone by and we have stagnated. We are going to be in stagnation for quite a while."Noting that the local manufacturing sector would also experience stagnant growth, Mahabir said the time had come for the industry to become more innovative as businesses across the world have had to adjust to "similar levels of difficulty."
Government must limit spending
The economist added that the US and European economies, which he described as the main drivers for tourism in the Caribbean, were still experiencing economic woes, which reflected in slower growth in T&T's non-energy GDP.Based on the associated sharp fall in government revenue, Dr Mahabir said it was "very difficult" to foresee a rapid economic recovery for T&T and called on government to be more prudent with the public's purse.
"It is at a stage where government cannot be reckless with the kind of promises that it keeps making. It has to temper these particular statements," he said. "I am predicting that Trinidad would have to learn to live with government's revenues estimated at around $38 billion over the next three-five years. In fact, every single sector in T&T had better get used to this."
Dr Mahabir added that the working class would be the most affected by the economic stagnation and stated that the wage bargaining environment "would continue to be a very difficult one" for the labour movement. "I recommend that government continue to look after the poor and the indigent in the country as they are the people most at risk and cannot defend their economic position in a time of economic decline," he said.