Raphael John-Lall

Pro­fes­sor of Eco­nom­ics, Roger Ho­sein be­lieves that the Unit­ed Na­tion­al Con­gress (UNC) Gov­ern­ment’s first Mid-Year Bud­get Re­view is an at­tempt to sta­bilise the econ­o­my.

In an in­ter­view with the Busi­ness Guardian, Ho­sein said the econ­o­my faces very se­ri­ous chal­lenges and the Gov­ern­ment is us­ing, what­ev­er tools it has at its dis­pos­al to meet the chal­lenges.

Fi­nance Min­is­ter Dav­en­dranath Tan­coo pre­sent­ed his maid­en Mid-Year Bud­get Re­view on June 18.

Par­lia­ment’s Stand­ing Fi­nance Com­mit­tee sup­ple­ment­ed the 2025 Bud­get of $59.7 bil­lion with a fur­ther $3.14 bil­lion for 28 min­istries and state di­vi­sions.

“The Gov­ern­ment’s 2025 Mid-Year Bud­get Re­view seems to have been craft­ed as a nec­es­sary fis­cal sta­bil­i­sa­tion ex­er­cise in the face of a very chal­leng­ing eco­nom­ic in­her­i­tance. With a $3.14 bil­lion in­crease in ex­pen­di­ture rais­ing the fis­cal deficit to $9.67 bil­lion, the ad­min­is­tra­tion has cho­sen to pri­ori­tise near-term sta­bil­i­ty and ad­min­is­tra­tive con­ti­nu­ity. Giv­en the depth of struc­tur­al im­bal­ances and the fragili­ty of for­eign ex­change dy­nam­ics, this con­ser­v­a­tive ap­proach may re­flect a de­lib­er­ate at­tempt to avoid macro­eco­nom­ic shocks while prepar­ing for a more sub­stan­tive in­ter­ven­tion in the up­com­ing 2026 Bud­get,” Ho­sein said.

He added that while the re­view does not present a full-fledged sup­ply-side re­form pack­age, this may be by de­sign.

Sup­ply-side eco­nom­ics is a macro­eco­nom­ic the­o­ry ar­gu­ing that eco­nom­ic growth is best achieved by re­duc­ing bar­ri­ers to pro­duc­tion, main­ly through tax cuts and dereg­u­la­tion.

“The im­me­di­ate pri­or­i­ty ap­pears to be fis­cal triage, clos­ing fi­nanc­ing gaps, restor­ing ad­min­is­tra­tive or­der, and pre­serv­ing pol­i­cy head­room for more am­bi­tious re­forms lat­er in the year. The doc­u­ment does ref­er­ence crit­i­cal goals such as ex­port-led growth, for­eign ex­change sta­bil­i­sa­tion, and tax ad­min­is­tra­tion im­prove­ments, in­clud­ing the in­tro­duc­tion of trans­fer pric­ing leg­is­la­tion and In­land Rev­enue re­struc­tur­ing.”

He al­so said it is rea­son­able to in­ter­pret the ad­di­tion­al ex­pen­di­ture at this junc­ture as a sta­bil­is­ing ma­noeu­vre rather than a ful­ly ar­tic­u­lat­ed growth strat­e­gy.

“Giv­en the gov­ern­ment’s short tenure and the fis­cal con­straints in­her­it­ed, it is in my judge­ment a bit pre­ma­ture to ex­pect a sweep­ing pro­duc­tiv­i­ty over­haul in this mid-year re­view. This re­straint may re­flect pru­dence rather than in­er­tia, sig­nalling that more sub­stan­tive re­forms are be­ing re­served for the up­com­ing full-year bud­get cy­cle, where in­sti­tu­tion­al readi­ness and fis­cal tar­get­ing can be bet­ter aligned.”

Fore­casts down­grad­ed

Ho­sein al­so said that over the last few months the in­ter­na­tion­al agen­cies have down­grad­ed their fore­cast for the T&T econ­o­my.

He point­ed out that in the past six weeks, sev­er­al ma­jor eco­nom­ic datasets in one form or an­oth­er have been re­leased ei­ther part­ly or whol­ly fo­cus­ing on the T&T’s econ­o­my.

The first was the In­ter­na­tion­al Mon­e­tary Fund’s (IMF) World Eco­nom­ic Out­look April (WEO) 2025 data­base, pub­lished on April 22. This dataset re­vised both his­tor­i­cal and pro­ject­ed Gross Do­mes­tic Prod­uct (GDP) fig­ures down­ward.

“It showed the econ­o­my per­form­ing worse than ear­li­er pro­jec­tions from the April 2023 and 2024 edi­tions of the WEO data­base.

Sec­ond was the Q4 2024 Labour Force Sur­vey from the CSO, re­leased on April 23. The re­lease of Q4 2024 da­ta to be com­pared with 2023, over­all, the da­ta con­firmed high un­em­ploy­ment, low labour force par­tic­i­pa­tion, and weak job cre­ation.

Third was the An­nu­al Eco­nom­ic Sur­vey 2024, pub­lished by the Cen­tral Sta­tis­ti­cal Of­fice on May 2, 2025.”

He said the IMF’s April 2025 WEO data­base, re­leased April 22, sharply re­vised T&T’s eco­nom­ic out­look down­ward.

“Ear­li­er pro­jec­tions, es­pe­cial­ly the April 2023 edi­tion, an­tic­i­pat­ed a sol­id re­cov­ery, with re­al GDP reach­ing 89.5 in 2025 (2014=100). This lev­el of eco­nom­ic ac­tiv­i­ty de­clined by April 2024, when pro­jec­tions were cut to 85.7 for 2025, sig­nalling weak­er-than-ex­pect­ed growth. The April 2025 data­base wors­ened the pic­ture fur­ther, with the 2025 es­ti­mate down­grad­ed again to 84.2. The up­dat­ed fig­ures now show re­al GDP stay­ing well be­low 2014 lev­els through 2027, ef­fec­tive­ly mark­ing just over a lost decade of growth. These suc­ces­sive re­vi­sions re­veal that pre­vi­ous fis­cal as­sump­tions were based on out­dat­ed op­ti­mism. The April 2025 WEO re­shaped the eco­nom­ic base­line and high­light­ed deep­er struc­tur­al stag­na­tion than pre­vi­ous­ly ac­knowl­edged.”

He al­so said the sec­ond ma­jor da­ta re­lease was the Labour Force Sur­vey for Q4 2024 by the Cen­tral Sta­tis­ti­cal Of­fice (CSO), which was re­leased on April 23, 2025.

“The Labour Force Sur­vey showed that mar­ket con­di­tions in T&T weak­ened be­tween 2023 and 2024, ac­cord­ing to CSO’s April 23, 2025 re­lease. The to­tal labour force fell from 602,800 to 595,700, a drop of 7,100 per­sons. Em­ploy­ment de­clined from 578,800 to 566,200, re­flect­ing a net job loss of 12,600. Un­em­ploy­ment in­creased by 5,500, ris­ing from 24,000 to 29,500, which pushed the un­em­ploy­ment rate up from 3.98 per cent to 4.95 per cent.”

Third­ly, he point­ed to the pub­li­ca­tion of the An­nu­al Eco­nom­ic Sur­vey (AES) for 2024, which was re­leased on May 2, 2025.

“Be­tween 2023 and 2024, the econ­o­my showed even fur­ther signs of de­cline de­spite re­port­ed GDP growth. Crude oil out­put fell by 5 per cent, nat­ur­al gas by 1.6 per cent, and methanol by 6.7 per cent; the con­struc­tion sec­tor col­lapsed by 8.9 per cent, and man­u­fac­tur­ing still op­er­at­ed at just 70.8 per cent ca­pac­i­ty. De­clines in wa­ter sup­ply and on­go­ing un­der­per­for­mance in key ex­port sec­tors ex­posed wors­en­ing struc­tur­al fragili­ties.”

Grim pic­ture

Ac­cord­ing to Ho­sein, be­tween 2015 and 2024, T&T’s econ­o­my ex­pe­ri­enced a broad and deep de­cline across mul­ti­ple macro­eco­nom­ic in­di­ca­tors, sig­nalling a struc­tur­al eco­nom­ic re­treat rather than a cycli­cal down­turn. Re­al GDP fell from a base of 100 in 2014 to 82.5 in 2024, mean­ing the econ­o­my is now over 17 per cent small­er in re­al terms.

“The econ­o­my’s labour force par­tic­i­pa­tion rate de­clined sharply from 60.6 per cent in 2014 to 55.1 per cent in 2024, and the num­ber of em­ployed per­sons dropped by near­ly 60,000. This con­trac­tion in pro­duc­tive ca­pac­i­ty oc­curred along­side so­cial de­te­ri­o­ra­tion, with an­nu­al homi­cides ris­ing from 410 to 624, a 52 per cent in­crease. The val­ue of the TT dol­lar al­so fell sig­nif­i­cant­ly, with $100 in 2015 now hold­ing just 80.6 per cent of its orig­i­nal pur­chas­ing pow­er in 2024, while the Re­al Ef­fec­tive Ex­change Rate has re­mained broad­ly flat, sug­gest­ing lim­it­ed ex­ter­nal ad­just­ment.”

He con­clud­ed by say­ing that fis­cal and ex­ter­nal in­di­ca­tors paint an “equal­ly grim pic­ture.”

“Net of­fi­cial re­serves plunged from US$9.9 bil­lion to US$5.6 bil­lion, while ex­ter­nal debt more than dou­bled from US$2.2 bil­lion to US$5.6 bil­lion. The non-en­er­gy fis­cal deficit wors­ened dras­ti­cal­ly, mov­ing from $12.5 bil­lion to over $26.8 bil­lion. Un­for­tu­nate­ly, the food im­port bill re­mains high, and tourism ar­rivals have col­lapsed from 519,000 to 336,100, in­di­cat­ing lost earn­ings in the ser­vices sec­tor.

“Cap­i­tal ex­pen­di­ture has been slashed by near­ly 42 per cent, cur­tail­ing the state’s de­vel­op­ment ca­pac­i­ty. Re­vers­ing this col­lapse will de­mand not on­ly new sources of ex­port earn­ings but al­so in­sti­tu­tion­al re­form, pri­vate in­vest­ment re­vival, stronger gov­er­nance, and a fo­cused na­tion­al de­vel­op­ment strat­e­gy.”