Raphael John-Lall

The lift­ing of the pan­dem­ic re­stric­tions of 2022 led to an in­crease in eco­nom­ic ac­tiv­i­ty in T&T, with some sec­tors see­ing a re­bound al­though this resur­gence was not as strong as the per­for­mance in the pre-pan­dem­ic pe­ri­od of the econ­o­my, ac­cord­ing to eco­nom­ics lec­tur­er at the Uni­ver­si­ty of the West In­dies (UWI) Dr Re­gan De­o­nanan.

On his Twit­ter ac­count on May 20, Fi­nance Min­is­ter Colm Im­bert re­vealed that T&T’s gross do­mes­tic prod­uct (GDP) per capi­ta was 30 per cent high­er in 2023 than it was in 2020.

Us­ing Cen­tral Sta­tis­ti­cal Of­fice (CSO) da­ta, De­o­nanan gave an analy­sis of the con­di­tions that could have pos­si­bly led to such favourable ex­pan­sion.

“Along with the lift­ing of pan­dem­ic re­stric­tions in 2022, there has been a con­cur­rent rise in eco­nom­ic ac­tiv­i­ty as some of the ma­jor in­dus­tries re­bound­ed. GDP from the trade, man­u­fac­tur­ing, and min­ing in­dus­tries, for the first three quar­ters of 2022, grew by 3.1 per cent, 4.5 per cent and 0.5 per cent, re­spec­tive­ly, when com­pared with the first three quar­ters of 2021. This may be dri­ven by the non-en­er­gy sec­tor as non-en­er­gy GDP in­creased by 4.7 per cent over the same pe­ri­od, while en­er­gy GDP de­clined by 0.8 per cent,” he said in a state­ment.

Econ­o­mists gen­er­al­ly say that GDP per capi­ta mea­sures the eco­nom­ic out­put of a na­tion per per­son.

It seeks to de­ter­mine the pros­per­i­ty of a na­tion by eco­nom­ic growth per per­son in that na­tion. De­o­nanan said re­al GDP per capi­ta growth is a mea­sure of the in­crease in a coun­try’s lev­el of pro­duc­tion that ac­counts for in­fla­tion and pop­u­la­tion size and it is, there­fore, among the most use­ful and re­li­able mea­sures of eco­nom­ic progress.

In his tweet, Im­bert al­so com­pared the coun­try’s GDP to oth­er Cari­com coun­tries which show T&T is on par with Bar­ba­dos and way ahead of Ja­maica.

His tweet read: “T&T’s GDP per capi­ta in 2023 is US$21,000, Ja­maica’s is US$6,200 and Bar­ba­dos’ is US$21,000. In 2020, our GDP per capi­ta was US$16,100, Ja­maica’s was US$5,100 and Bar­ba­dos’ was US$16,600. Our GDP per capi­ta in­creased by 30 per cent from 2020 to 2022, Ja­maica by 21 per cent and Bar­ba­dos by 26 per cent.”

Al­though, the Fi­nance Min­is­ter’s da­ta show an ex­pan­sion of GDP per capi­ta be­tween 2020 and 2023, the da­ta shows that over the al­most 10-year pe­ri­od from 2012 to 2021 there was a de­cline. The GDP per capi­ta in 2012 was $130,604 and by 2021 it fell to $109,392 ac­cord­ing to the CSO da­ta De­o­nanan gave.

“Based on pub­licly avail­able da­ta for re­al GDP and pop­u­la­tion from the Cen­tral Sta­tis­ti­cal Of­fice of T&T, re­al GDP per capi­ta growth was 3.4 per cent in 2013, 3.0 per cent in 2014 and the an­nu­al fig­ures have been neg­a­tive since then till 2021 (re­al GDP growth for 2019 is record­ed as +0.1 per cent, while re­al GDP per capi­ta growth is -0.2 per cent). “For the pe­ri­od 2013 to 2019, be­fore the ef­fects of the COVID-19 pan­dem­ic, per capi­ta growth av­er­aged -1.1 per cent an­nu­al­ly. Re­al GDP per capi­ta in 2019 was 8.1 per cent low­er than it was in 2012. Dur­ing the pan­dem­ic pe­ri­od, re­al GDP per capi­ta de­clined by 7.9 per cent and 1.1 per cent in 2020 and 2021, re­spec­tive­ly. Re­al GDP per capi­ta in 2021 was 8.9 per cent low­er than it was in 2019 and 16.2 per cent low­er than it was in 2012.”

Suc­ces­sive Gov­ern­ments have been talk­ing about in­creas­ing the GDP per capi­ta and rais­ing liv­ing stan­dards for years.

Al­most 10 years ago in 2014, the Busi­ness Guardian re­port­ed a speech made by then Peo­ple’s Part­ner­ship Plan­ning Min­is­ter Bhoe Tewarie who com­ment­ed on what T&T’s GDP per capi­ta would like in the fu­ture.

“In 1967, Sin­ga­pore was worse than T&T in GDP per capi­ta and in terms of gen­er­al liv­ing con­di­tions. We must cre­ate our own dream. We can be a coun­try with a per capi­ta in­come of US$40,000 in­stead of US$20,000 in less than ten years. We can have a GDP of $360 bil­lion in­stead of $179 bil­lion in less than ten years. We can have a fi­nan­cial sec­tor that is a bridge be­tween monies in the south­ern hemi­sphere and monies in the east­ern part of the world,” he said.

Weak growth

While De­o­nanan ac­knowl­edged the eco­nom­ic growth seen in the most re­cent avail­able da­ta may re­flect the re­bound­ing of sec­tors that de­clined dur­ing the pan­dem­ic, as well as an uptick in the non-en­er­gy sec­tor, he said this does not re­flect an im­prove­ment in re­al GDP when com­pared to the pre-pan­dem­ic pe­ri­od.

“To­tal re­al GDP for the first three quar­ters of 2022 is ap­prox­i­mate­ly $109 bil­lion. While this is a 3 per cent in­crease com­pared to the first three quar­ters of 2021, it is still 7.2 per cent low­er than the GDP for the first three quar­ters of 2019. The fig­ures for the an­nu­al re­al GDP for 2022 are not yet re­leased. The IMF, how­ev­er, in its re­cent 2023 Ar­ti­cle IV Con­sul­ta­tion for T&T, es­ti­mat­ed re­al GDP growth to be 2.5 per cent for 2022 (Source: T&T: 2023 Ar­ti­cle IV Con­sul­ta­tion-Press Re­lease; and Staff Re­port). This puts re­al GDP at ap­prox­i­mate­ly $153.3 bil­lion for 2022, and re­al GDP per capi­ta at $112,270.”

He said the COVID-19 pan­dem­ic had an ad­verse ef­fect on the econ­o­my. Sev­er­al of the econ­o­my’s ma­jor in­dus­tries were af­fect­ed.

“GDP from the trade, man­u­fac­tur­ing, and min­ing in­dus­tries all de­clined by 11 per cent in 2020. To­geth­er, these in­dus­tries con­tribute to ap­prox­i­mate­ly 56 per cent of GDP. This may have been dri­ven by de­vel­op­ments in the en­er­gy sec­tor which de­clined by 12 per cent in 2020, while non-en­er­gy GDP de­clined by 5.5 per cent. In 2021, en­er­gy GDP de­clined by a fur­ther 2.7 per cent while non-en­er­gy GDP de­clined by 0.3 per cent.”

Macro-eco­nom­ic

sta­bil­i­ty

For­mer Cen­tral Bank Gov­er­nor, Win­ston Dook­er­an, who al­so served as a Fi­nance Min­is­ter for part of the 2010 to 2015 PP ad­min­is­tra­tion, in a state­ment to the Busi­ness Guardian at­trib­ut­es this ex­pan­sion in the GDP per capi­ta to the re­cent com­mod­i­ty price in­creas­es.

“The min­is­ter may at­tribute any in­creas­es to com­mod­i­ty price in­creas­es due to sup­ply changes com­ing out of the Ukraine/Rus­sia war and its im­pact on glob­al en­er­gy prices and fluc­tu­a­tions. Lo­cal­ly, he may at­tribute it to ‘some in­cip­i­ent growth in the non-en­er­gy sec­tor’ but it is not clear if this is sus­tain­able, giv­en the com­pet­i­tive­ness of the econ­o­my. The min­is­ter can un­der­line these pos­i­tive de­vel­op­ments as be­ing pro­mot­ed by macro-eco­nom­ic sta­bil­i­ty of the coun­try’s bal­ance sheets—fis­cal and bal­ance of pay­ment.”

When asked if dif­fer­ent sec­tors like the busi­ness sec­tor and even or­di­nary peo­ple are ex­pe­ri­enc­ing this in­crease in wealth, he replied by say­ing that there needs to be a change to the “in­sti­tu­tion­al struc­ture.”

“Two ar­eas of short­com­ings are the prospects of en­doge­nous growth in the econ­o­my–growth strat­e­gy from with­in, and in­come dis­tri­b­u­tion trends–mean­ing the im­pact on the vul­ner­a­ble sec­tor. Here, there is lit­tle ef­fort to change the in­sti­tu­tion­al struc­ture, which sus­tains in­come and pover­ty changes to the low-in­come groups and the lag­ging sec­tors of the econ­o­my. Pen­sion and cost of liv­ing buffers are fac­ing ac­tu­ar­i­al chal­lenges, so the sus­tain­abil­i­ty of the growth ef­fort is at risk.”

He added that the econ­o­my must be man­aged in a way that in­equal­i­ties in so­ci­ety are ad­dressed.

“The pol­i­cy frame­work for bal­ance sheet sta­bil­i­ty is reap­ing re­wards, but fis­cal man­age­ment must have econ­o­my-wide ef­fects to deal with de­vel­op­ment and dis­par­i­ty of in­come and pover­ty is­sues and en­doge­nous growth. The record card is the right di­rec­tion; how­ev­er, ma­jor in­sti­tu­tion­al change may pro­vide a stim­u­lus for eq­ui­table de­vel­op­ment.”