Cur­tis Williams

cur­tis.williams@guardian.co.tt

The Cen­tral Bank is pre­dict­ing that there could be con­tin­ued lay­offs and re­duc­tion in work­ing hours as the im­pact of the Coro­n­avirus pan­dem­ic con­tin­ues.

In its lat­est Mon­e­tary Pol­i­cy Re­port the Bank not­ed that the stay at home or­ders had hurt the labour mar­kets and any in­crease in em­ploy­ment and the pace at which this may hap­pen will de­pend on an in­crease in ag­gre­gate de­mand.

The re­port read:”The ad­just­ments in the labour mar­ket that have al­ready tak­en place, in­clud­ing lay­offs and re­duc­tions in work­ing hours, could per­sist for some time de­pend­ing on the strength of ag­gre­gate de­mand.”

Ac­cord­ing to the Bank the pace of re­cov­ery of the T&T econ­o­my in 2021 will de­pend on both lo­cal and glob­al fac­tors.

“The pace and ex­tent of re­cov­ery in 2021 will de­pend on the still un­known path of this dead­ly pan­dem­ic and the reper­cus­sions on glob­al trade, com­mod­i­ty mar­kets and do­mes­tic busi­ness and em­ploy­ment.” Ac­cord­ing to the Mon­e­tary re­port.

The Mon­e­tary Re­port showed that the col­lapse of oil, gas and petro­chem­i­cal prices were sig­nif­i­cant due to mild win­ters, Coro­n­avirus and Trade wars which all led to a col­lapse in de­mand and an over-sup­ply sit­u­a­tion.

Ac­cord­ing to the Cen­tral Bank be­tween Jan­u­ary and Feb­ru­ary, glob­al crude oil de­mand plum­met­ed in re­ac­tion to the spread of COVID-19, putting down­ward pres­sure on oil prices.

It read: “From Jan­u­ary to April, crude oil prices dipped by al­most US$41 per bar­rel, a de­cline of near­ly 71 per cent. Nat­ur­al gas prices fell by 14.3 per cent over the same pe­ri­od, re­flect­ing the per­sis­tent­ly weak de­mand due to mild weath­er in im­port­ing coun­tries. In May, crude oil prices staged a small re­cov­ery fol­low­ing the drop to ze­ro, but prices re­mained far be­low pre-pan­dem­ic lev­els.”

This has in part re­sult­ed in the Cen­tral Gov­ern­ment’s deficit be­ing pro­ject­ed to be high­er than ini­tial­ly bud­get­ed for FY2019/20 re­sult­ing in a rise in pub­lic sec­tor bor­row­ing, sup­ple­ment­ed by draw­downs from the HSF.

The Cen­tral Bank said it ex­pects a small­er sur­plus in the coun­try’s ex­ter­nal cur­rent ac­count due to rel­a­tive­ly sub­dued en­er­gy prices and more slug­gish de­mand for Trinidad and To­ba­go’s non-en­er­gy ex­ports from CARI­COM.

Be­fore the COVID-19 pan­dem­ic, in the fourth quar­ter of 2019, the Trinidad and To­ba­go econ­o­my dis­played ten­ta­tive signs of mod­est ac­tiv­i­ty the Bank said.

The re­port not­ed that Pre­lim­i­nary da­ta show a 1.4 per cent in­crease (year-on-year) in the Cen­tral Bank’s Quar­ter­ly In­dex of Eco­nom­ic Ac­tiv­i­ty in the fourth quar­ter, led by the non-en­er­gy sec­tor Con­struc­tion ac­tiv­i­ty turned up­ward with the ac­cel­er­a­tion of pub­lic sec­tor in­fra­struc­ture pro­grammes such as the Curepe In­ter­change and oth­er ma­jor road works. One of sev­er­al in­di­ca­tors used to track whole­sale and re­tail trad­ing ac­tiv­i­ty is the num­ber of mo­tor ve­hi­cle reg­is­tra­tions.

The lo­cal for­eign ex­change mar­ket re­mained tight over the first five months of 2020 the bank said.

It not­ed that low­er en­er­gy sec­tor con­ver­sions led to re­duced pur­chas­es from the mar­ket by au­tho­rised deal­ers. The eco­nom­ic sit­u­a­tion was al­so re­flect­ed in a de­cline in de­mand for for­eign ex­change the Bank re­vealed.

At the end of May 2020, of­fi­cial in­ter­na­tion­al re­serves stood at US$6.9 bil­lion, equiv­a­lent to 8.0 months of im­port cov­er.