Technically, T&T is in recession, senior economists have declared. This, despite Central Bank Governor Ewart Williams’ insistence that T&T is not in a recession but experiencing a sharp economic slowdown. Senior economists, Dhaneshwar Mahabir and Winston Dookeran, a former Central Bank governor, sought to clear up the confusion over the state of the economy in a Sunday Guardian interview last week.

“Yes, we’re definitely in a recession. There is no ifs, buts and maybes. “If we are experiencing a continuing reduction in the size of the economy, if it’s shrinking, getting smaller, then, yes... we are in a recession. “We have been in persistent decline for the last nine months and the economy will continue to decline for the next 12 months.” Mahabir noted, however, that the term “recession,” is really a developed country phenomenon but it’s technically correct to apply it to our present situation. He continued, “It means that the material welfare of those who work in such an economy will experience a reduction in income.

“I’m foreseeing more job losses. People should pinch and save every penny they can over this difficult period.” Mahabir said natural gas prices have been around the extremely low figure of $3.50 per million British Thermal Units since September last year. He said he would not gamble on natural gas, T&T’s main foreign exchange earner, rising in the next fiscal year. Oil prices, although around US$70 a barrel, are volatile and unpredictable, he said. He said the Heritage and Stabilisation Fund, which has US$2.8 billion, is “so small.”

Revenue shortfall

Mahabir estimated that the coming National Budget will be close to $45 billion, even though maximum revenues are projected to be $38 billion.
Describing the economic scenario as gloomy, the economist said he could not say when T&T would recover but noted that the country would experience a major revenue shortfall for 2009 and 2010.

Mahabir said if things got really bad, the Government may even be forced to borrow money from the International Monetary Fund, which would require an adjustment programme in return. Further, Government would be unable to continue public expenditure and maintain significant assistance to the needy at the same time, he said. “Government will have to make choices. “If they are saying they are not going to interfere with the Government Assisted Tertiary Education programme, or Chronic Diseases Assistance Programme, they would have to decide which public works they would do.”

Technical recession

“There’s no doubt we’re in a technical recession,” Dookeran told the Sunday Guardian last Friday. “We’re in a recession as defined by the National Bureau for Economic Research, the international authority in recession issues.”

Accusing Williams of confusing the electorate and contradicting himself, Dookeran added, “Williams spent an entire press conference trying to say we’re not in a recession, we are in a slowdown. “But he has given all the evidence to suggest that we’re in recession time. “He said we’re not in a crisis and things will get better but he has identified the performance drivers in the economy that will alter the direction in which the country is moving.” Dookeran warned citizens to be prudent about their spending.