One econ­o­mist says the Cen­tral Bank’s Ju­ly Eco­nom­ic Bul­letin does not pro­vide suf­fi­cient in­for­ma­tion to com­fort­ably pre­dict that there would be any sig­nif­i­cant im­prove­ment in the en­er­gy and non-en­er­gy sec­tors as fis­cal 2023 draws to a close.

The Eco­nom­ic Bul­letin, which was pub­lished by the Cen­tral Bank on Mon­day, said the eco­nom­ic ac­tiv­i­ty in this coun­try is ex­pect­ed to im­prove this year, bol­stered by ac­tiv­i­ty in both the en­er­gy and non-en­er­gy sec­tors.

The bul­letin stat­ed that nat­ur­al gas sup­plies should con­tin­ue to ben­e­fit from key up­stream en­er­gy sec­tor projects such as Shell Trinidad and To­ba­go’s Col­ib­ri, De­N­o­vo’s Zan­dolie, and bpTT’s Cas­sia Com­pres­sion and that the non-en­er­gy sec­tor per­for­mance will be dri­ven by in­creased busi­ness ac­tiv­i­ty and the con­tin­ued resur­gence of con­sumer de­mand.

In an in­ter­view with Busi­ness Guardian on Tues­day, econ­o­mist Dr Mar­lene Attzs said while the Eco­nom­ic Bul­letin pro­vid­ed a use­ful up­date on the pre­vail­ing macro-eco­nom­ic con­di­tions, there was a re­cent state­ment from En­er­gy Cham­ber Pres­i­dent, Dr Dax Dri­ver, about the ur­gent at­ten­tion need­ed to ad­dress bot­tle­necks in the en­er­gy sec­tor and the cau­tion that if “… we do not get our act to­geth­er soon this coun­try’s econ­o­my is go­ing to con­tract ‘huge­ly’ and the stan­dard of liv­ing for the en­tire pop­u­la­tion will plum­met.” (See page 11)

Attzs said Dri­ver’s com­ments cou­pled with the da­ta com­ing out of the Cen­tral Bank sug­gest to her that it might be over­ly op­ti­mistic to ex­pect any sig­nif­i­cant im­prove­ment for the en­er­gy and non-en­er­gy sec­tors for the re­main­der of 2023.

Asked if she thinks the re­cent eco­nom­ic read­ing of the T&T econ­o­my will in­flu­ence Fi­nance Min­is­ter Colm Im­bert’s up­com­ing bud­get, the econ­o­mist said it is left to be seen how the min­is­ter treats the in­ter­play of ac­tiv­i­ty in the en­er­gy and non-en­er­gy sec­tors in his bud­get pre­sen­ta­tion for fis­cal year 2024.

“I do sus­pect how­ev­er that the Min­is­ter will fo­cus on the fact that there was a sur­plus of $88.0 mil­lion in the first nine months of fis­cal year (FY) 2022/23, al­beit a low­er sur­plus from a year ear­li­er.”
That aside, Attzs in­di­cat­ed that she would like to see more tan­gi­ble pro­vi­sions made to ease the pres­sure on the av­er­age cit­i­zen.

“The pop­u­la­tion con­tin­ues to ex­pe­ri­ence a high­er cost of liv­ing with a re­duced qual­i­ty of life, ex­ac­er­bat­ed by the grow­ing crime scourge. Added to all this, there are loom­ing ad­di­tion­al is­sues such as prop­er­ty tax and util­i­ty rate in­creas­es which will un­doubt­ed­ly con­tin­ue to im­pact neg­a­tive­ly on many cit­i­zens, es­pe­cial­ly per­sons in the low­er in­come stra­ta,” she em­pha­sised.

The Cen­tral Bank stat­ed head­line in­fla­tion de­cel­er­at­ed to reach 10.1 per cent in June 2023 from a high of 17.3 per cent in Jan­u­ary 2023. Core in­fla­tion fell to 4.8 per cent in June 2023 from 6.1 per cent in Jan­u­ary 2023, as price in­creas­es in most sub-in­dices eased.
Ac­cord­ing to Attzs, the de­cel­er­a­tion of head­line in­fla­tion will hope­ful­ly trick­le down to and ben­e­fit the pop­u­la­tion in terms of the low­er food prices faced by con­sumers. This could pro­vide much-need­ed re­lief for house­holds and busi­ness­es.

Attzs said since the CBTT has main­tained its re­po rate for the past three years, she sus­pects that in­ter­est rates are un­like­ly to change at this time notwith­stand­ing any de­cel­er­a­tion of head­line in­fla­tion cit­i­zens may see.
As it per­tains to the in­di­ca­tors that sug­gest that do­mes­tic ac­tiv­i­ty dipped in the fourth quar­ter of 2022 but im­proved over the first quar­ter of 2023, Attzs said if the econ­o­my con­tin­ues to be pri­mar­i­ly de­pen­dent on the en­er­gy sec­tor as its main source of do­mes­tic eco­nom­ic ac­tiv­i­ty, then the volatil­i­ty in that sec­tor will be re­flect­ed in the do­mes­tic in­di­ca­tors from time to time.

“The eco­nom­ic re­silience re­quired to man­age those “dips” can on­ly be achieved if there is growth in the non-en­er­gy sec­tor – back to the di­ver­si­fi­ca­tion and ease (and cost) of do­ing busi­ness con­ver­sa­tions,” she said.
The Cen­tral Bank stat­ed that the un­em­ploy­ment rate mea­sured 4.9 per cent in the first quar­ter of 2023, slight­ly low­er than the 5.1 per cent record­ed in the same pe­ri­od one year ear­li­er.

“The num­ber of per­sons with jobs de­creased by 8.1 thou­sand per­sons (year-on-year), while the num­ber of per­sons with­out jobs and seek­ing em­ploy­ment (“the un­em­ployed”) fell by 1.6 thou­sand per­sons. Ad­di­tion­al­ly, a con­trac­tion of the labour force (9.7 thou­sand per­sons) con­tributed to a de­cline in the labour force par­tic­i­pa­tion rate to 55.2 per cent in the first quar­ter of 2023, as com­pared to 55.9 per cent in the com­pa­ra­ble quar­ter of 2022,” the bul­letin fur­ther stat­ed.

Weigh­ing in on these sta­tis­tics, the econ­o­mist said the un­em­ploy­ment rate is a mea­sure of the num­ber of un­em­ployed peo­ple who are ac­tive­ly look­ing for a job.
“Per­sons who are ei­ther un­der­em­ployed or have be­come dis­cour­aged and stopped look­ing for work will not be cap­tured in the un­em­ploy­ment rate.

Achiev­ing a low­er un­em­ploy­ment rate re­quires an ac­cel­er­at­ed rate of re­al eco­nom­ic growth to en­sure more peo­ple can be gain­ful­ly (and suit­ably) em­ployed. In our sit­u­a­tion, em­ploy­ment must come from both the en­er­gy and non-en­er­gy sec­tors and dri­ving pub­lic and pri­vate sec­tor em­ploy­ment op­por­tu­ni­ties,” she out­lined.

Ac­cord­ing to the Eco­nom­ic Bul­letin, the gen­er­al gov­ern­ment debt grew by $925.6 mil­lion to $140.3 bil­lion in the pe­ri­od Oc­to­ber 1, 2022 to June 30, 2023.
Ad­just­ed gen­er­al gov­ern­ment debt out­stand­ing (which ex­cludes debt is­sued for ster­il­i­sa­tion pur­pos­es) al­so in­creased to $134.6 bil­lion (68.2 per cent of GDP) at the end of June 2023 from $129.7 bil­lion (66.5 per cent of GDP) record­ed at the end of Sep­tem­ber 2022.
Cen­tral gov­ern­ment do­mes­tic debt (ex­clud­ing ster­ilised debt) reached $70.0 bil­lion (35.5 per cent of GDP) at the end of June 2023 from $66.2 bil­lion (33.9 per cent of GDP) at the end of Sep­tem­ber 2022.

The Cen­tral Bank re­port­ed that glob­al eco­nom­ic per­for­mance will like­ly con­tin­ue to be im­pact­ed by the ef­fects of re­stric­tive mon­e­tary pol­i­cy, height­ened fi­nan­cial stress, and on­go­ing geopo­lit­i­cal ten­sions.

Notwith­stand­ing un­cer­tain­ty sur­round­ing the prospects for glob­al growth, the In­ter­na­tion­al Mon­e­tary Fund (IMF), in its Ju­ly 2023 World Eco­nom­ic Out­look (WEO) Up­date, fore­casts glob­al eco­nom­ic growth of 3.0 per cent in 2023, 0.2 per cent high­er than its fore­cast in April 2023.

The Ju­ly Eco­nom­ic Bul­letin added that the up­ward re­vi­sion large­ly re­flects stronger-than-ex­pect­ed growth in the first quar­ter of 2023 dri­ven by the ser­vices sec­tor.