The Central Bank Governor has admitted Trinidad and Tobago is in a recession. In an address to the media and stakeholders at the release of T&T’s Monetary Policy Report for October, Governor Ewart Williams confirmed T&T experienced three consecutive quarters of decline in gross domestic product (GDP) since the fourth quarter of 2008. He said: “If we use the conventional definition of a recession to be at least three consecutive quarters of decline, then I will have to say we are in a recession. “However, considering the position of the country and the fact we have managed to avoid the worst impacts of the global downturn, I would take that definition with a pinch of salt. “Perhaps we are in a recession. What’s in a word?” he asked.

The governor said real GDP was estimated to have registered a decline of 3.6 per cent in the second quarter of 2009, following declines of 4.6 per cent in the first quarter of 2009 and a 1.0 per cent decline in the last quarter of 2008. The governor projected there would be a small growth in GDP over the next two quarters, but it would not be enough to pull back the overall decline for 2009, which he projected to be around two per cent by the end of the year. He added: “While the energy sector grew by 2.2 per cent, the non-energy sector declined by 7.5 per cent in the second quarter of 2009. “Within the non-energy sector, the second quarter indicator reveals a decline in activity in the construction and the distribution sectors and a pronounced fall in manufacturing output.”

He said the decline in economic activity and demand and the delayed impact of the decline in food prices have contributed to a sharp fall in the inflation rate from a high of 15.4 per cent in October 2008 to 4.9 per cent in September 2009. “Available indicators for the third quarter of 2009 show no convincing signs of a pick-up in private demand, so the Central Bank is now projecting a decline in GDP in the range of 1.5 to 2 per cent, compared with earlier projections of 0.9 per cent,” Williams said. The story was not all bad news, however, as he noted a significant decline in headline inflation, success in controlling unemployment and the turnaround of the global economy.

He said: “Given the significant easing of inflationary pressures over the past few months, the bank’s projection of end-December inflation has been revised downwards to between five and six per cent. The headline inflation target for 2010 remains low at five per cent.” He said the strengthening of oil prices, the consolidation of the global recovery and further interest rates reductions could help boost domestic consumer confidence and lead to a moderate pick-up in private demand by about the second quarter of 2010. He added: “This, combined with planned Government expenditures on infrastructural projects, should contribute to the achievement of the two per cent growth rate projected for 2010.