Indicators monitored by the T&T Central Bank suggest that economic activity picked up in the third quarter of 2019 compared to one year earlier, as the non-energy sector showed improvement.
This, according to the Central Bank Economic Bulletin for January which is published twice per year and reviews the economic conditions of T&T.
The Central Bank stated that the growth in the non-energy economy was driven by the wholesale and retail trade, financial and insurance activities, and construction sub-sectors. However, the performance in the energy sector was weaker as weaker crude oil production continued to weigh on activity.
The bulletin also indicated that during the third quarter of 2019, crude oil output maintained its downward trajectory, while natural gas production increased, generating an overall decline (year-on-year) in the mining and quarrying sub-sector. Meanwhile, the improved availability of natural gas spurred activity in both the midstream and downstream industries. Data for the fourth quarter point to increased production of several commodities when compared to the fourth quarter of 2018.
Most retrenchments in manufacturing, construction
The Central Bank said in the absence of up-to-date labour market data, supplemental data suggest that labour market conditions remained weak in 2019.
Statistics revealed by the Central Bank show that retrenchment notices filed with the Ministry of Labour and Small Enterprise Development in 2019 highlighted that 1,397 people were retrenched, compared to 1,681 people in 2018. Meanwhile, job advertisements in the print media declined by 10.3 per cent (year-on-year).
The data further revealed that most of the retrenchments occurred in the manufacturing (276 people), construction (262 people), energy (227 people), and community, social and personal services (214 people) sectors. Further, total man hours worked declined by 25.7 per cent (year-on-year) during the third quarter of 2019, reflecting, in large part, the closure of the Petrotrin oil refinery in November 2018.
Inflation well contained over the second half of 2019
Headline inflation data from the Central Bank Bulletin showed that inflation remained well contained over the second half of 2019 against the backdrop of the measured pace of economic activity.
“Over July to December 2019, headline inflation slowed from 1.1 per cent to 0.4 per cent, averaging 0.8 per cent over the six-month period. Food inflation, which measured 1.5 per cent in July 2019, slowed progressively over the period to -1.0 per cent in December 2019, on account of price declines for fresh vegetables and fruits. Core inflation was subdued, and moved from 1.0 per cent in July to 0.6 per cent in December,” the report said.
The report also reminded the public that in December 2019, the Central Bank announced the introduction of a new polymer $100 bill and the subsequent demonetisation of the paper $100 note. The new polymer note became legal tender from December 9, 2019, while the older paper notes ceased to be legal tender after December 31, 2019.
OUTLOOK 2020
T&T’s economy is tied to the rest of the global economy and the Central Bank gave its outlook for the global economy.
The Central Bank projected that Global growth is projected to remain relatively subdued in 2020, weighed down by heightened geopolitical tensions and the impact of the Covid-19 virus on trade and finance.
“The International Monetary Fund (IMF) (World Economic Outlook Update, January 2020) forecasts the world economy to expand by 3.3 per cent in 2020, which is lower than the 3.6 per cent recorded in 2018 but higher than the 2.9 per cent expected for 2019. Downside risks to global growth include a further slowdown in manufacturing and global trade stemming from higher tariffs and declining industrial production in some economies, particularly in Asia where production and supply chains are being hampered by the Covid-19 virus epidemic.”
Energy sector activity could encounter setbacks
As for the local energy sector, the Central Bank gave a subdued forecast.
“Locally, energy sector activity could encounter setbacks given uncertainties associated with the supply of natural gas to Atlantic Train 1, following the disappointing results of bpTT’s infill drilling programme in 2019. In the non-energy sector, a durable recovery will hinge upon improvements in the execution of projects under the Public Sector Investment Programme (PSIP) and other capital spending by the Government.”
The Central Bank Report was also cautious about the state of unemployment in the country.
“Meanwhile, in the difficult global and domestic economic settings, employment growth will likely remain challenged as private sector businesses continue to restructure and streamline their operations.”