GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

Econ­o­mists are urg­ing pol­i­cy­mak­ers to treat the World Bank’s lat­est eco­nom­ic fore­cast as a warn­ing ahead of the na­tion­al bud­get, af­ter the in­ter­na­tion­al lender pro­ject­ed that T&T’s econ­o­my will con­tract for a sec­ond con­sec­u­tive year be­fore stag­ing a re­cov­ery in 2027.

In an Oc­to­ber eco­nom­ic up­date, the World Bank Group fore­cast that T&T econ­o­my would re­bound by 2.5 per cent in 2027, fol­low­ing de­clines of 0.5 per cent in 2025 and an es­ti­mat­ed 0.2 per cent this year.

While econ­o­mists Dr Vanus James and Dr Ronald Ramkissoon agree that the pro­ject­ed de­clines re­flect the econ­o­my’s cur­rent chal­lenges, both ques­tioned whether suf­fi­cient con­di­tions ex­ist to sup­port the growth fore­cast for 2027.

James said the most strik­ing as­pect of the re­port was not the pro­ject­ed con­trac­tions but the ex­pec­ta­tion of a sud­den turn­around with­in a sin­gle year.

“The World Bank has es­sen­tial­ly tipped in with a record of a 0.5 per cent de­cline of re­al GDP in 2025 and an es­ti­mate of a 0.2 per cent de­cline in 2026,” he said adding, “It has al­so pre­dict­ed that the coun­try would grow by 2.5 per cent in 2027, but it has pro­vid­ed no ba­sis for that pre­dict­ed sud­den up­swing in growth by about 2.7 per cent in a sin­gle cal­en­dar year.”

Ac­cord­ing to James, the re­port cor­rect­ly high­lights this coun­try’s po­ten­tial, not­ing that T&T pos­sess­es the tal­ent, re­sources and ca­pa­bil­i­ties need­ed to per­form bet­ter eco­nom­i­cal­ly.

How­ev­er, he ar­gued the re­port did not ex­plain what pol­i­cy shifts, in­vest­ments or in­sti­tu­tion­al re­forms would oc­cur to gen­er­ate such a dra­mat­ic im­prove­ment.

He said per­haps the most im­por­tant omis­sion in the World Bank’s as­sess­ment is the ab­sence of any dis­cus­sion of in­sti­tu­tion­al change.

“Most im­por­tant is that it has in­di­cat­ed no type of in­sti­tu­tion­al change that would un­der­score the 2.7 per cent swing in growth go­ing in­to the fu­ture,” James said.

He ar­gued that the fore­cast ap­pears dis­con­nect­ed from the re­al­i­ties fac­ing the econ­o­my, in­clud­ing de­clin­ing nat­ur­al gas pro­duc­tion, con­tin­ued de­pen­dence on the en­er­gy sec­tor and ex­po­sure to volatile glob­al com­mod­i­ty mar­kets.

“What the World Bank is re­al­ly do­ing here is au­thor­i­ta­tive spec­u­la­tion or some kind of math­e­mat­i­cal de­c­la­ra­tion of faith,” James said as he con­tend­ed there is no in­di­ca­tion in the re­port of sig­nif­i­cant in­vest­ment in tar­get­ed in­dus­tries or struc­tur­al trans­for­ma­tion ca­pa­ble of sup­port­ing the pro­ject­ed ex­pan­sion.

He al­so ques­tioned whether the fore­cast as­sumes an im­prove­ment in en­er­gy sec­tor per­for­mance or ac­cess to re­gion­al en­er­gy re­sources but not­ed that such as­sump­tions are not out­lined in the re­port, fur­ther ar­gu­ing that T&T con­tin­ues to strug­gle with long­stand­ing struc­tur­al weak­ness­es, in­clud­ing an over-cen­tralised state, bu­reau­crat­ic bot­tle­necks and an econ­o­my that re­mains heav­i­ly fo­cused on do­mes­tic de­mand rather than ex­port com­pet­i­tive­ness.

Mean­while, econ­o­mist Ramkissoon said the World Bank’s pro­jec­tion of eco­nom­ic de­cline was large­ly con­sis­tent with con­di­tions al­ready vis­i­ble across the coun­try.

“It is in­deed not sur­pris­ing. The growth that we have been hav­ing, if growth at all, has in fact been anaemic,” Ramkissoon said.

He point­ed to in­di­ca­tors such as Cen­tral Bank da­ta, busi­ness clo­sures and ris­ing un­em­ploy­ment as ev­i­dence that eco­nom­ic ac­tiv­i­ty has been weak for some time.

“When we look around, we no­tice that. The Cen­tral Bank da­ta and so on. Busi­ness­es are clos­ing, peo­ple are be­ing un­em­ployed, and that has been hap­pen­ing for a lit­tle while,” he added.

Ramkissoon ac­knowl­edged that some in­ter­na­tion­al in­sti­tu­tions had pre­vi­ous­ly pro­ject­ed stronger growth rates for T&T but said the broad­er pic­ture re­mains one of eco­nom­ic stag­na­tion.

“I’m a lit­tle tak­en aback be­cause I think an­oth­er or­gan­i­sa­tion had slight­ly high­er growth rates for us. But all the same, it’s not sur­pris­ing that the econ­o­my has not been do­ing well,” he said.

With Fi­nance Min­is­ter Dav­en­dranath Tan­coo ex­pect­ed to present the na­tion­al bud­get on Mon­day, Ramkissoon said pol­i­cy­mak­ers should pay close at­ten­tion to the re­port’s find­ings and fo­cus on mea­sures that could stim­u­late eco­nom­ic ac­tiv­i­ty.