Economist: It will get worse

A senior University of the West Indies (The UWI) economics lecturer is predicting worse-than-expected contraction of the local economy this year of -3 to -3.5 per cent.

For 2016, the Finance Ministry in September projected a -2.3 per cent contraction, while in October, the International Monetary Fund (IMF) projected -2.7 per cent in its World Economic Outlook (WEO).

In a telephone interview yesterday, UWI senior economics lecturer Dr Roger Hosein said: “I am not surprised at the sharp contraction of the economy in the second quarter (Q2) of 2016, as it follows the trends in the price and production of oil and gas.”

Former minister in the finance ministry Mariano Browne, when contacted yesterday, also said he was not surprised, adding that it was in line with his expectations.

Hosein said: “What I am surprised by, however, is the magnitude of the contraction: minus 8 per cent in (the second quarter) 2016 means with -5.4 in Q1 2016, other things constant, we are heading for overall 2016 to have a very large contractionary figure, superseding the (-2.7 per cent) figure predicted by the IMF and the World Bank. One could probably expect an overall annual figure, based upon Q1-Q2 2016, assuming that Q3 and Q4 2016 are similar to quarter three and quarter four 2015, then the overall negative growth rate for 2016 may be about -3 to -3.5 per cent.”

The Central Bank of Trinidad and Tobago (CBTT) last Friday released its Monetary Policy Report (MPR) and Summary of Economic Indicators, which showed the worst ever quarterly economic contraction in the country’s history: -8 per cent in Q2. Only 1983’s economic contraction of -9.2 per cent for the full year (not quarterly) features the only known steeper decline.

Finance Minister Colm Imbert did not respond to e-mails, telephone calls, texts and voice messages up to yesterday, but in his September 30 budget speech in Parliament, told the nation to expect a -2.3 per cent economic contraction in 2016.

UWI financial economics lecturer Vaalmikki Arjoon said Friday the eight per cent quarterly shrinking of the economy in the second quarter of the year attests to the failure of current economic policies.

Hosein said the -8 per cent drop in economic activity in Q2 is a “sharp contraction that would take us back to the 2006 level of gross domestic product (GDP). It means that the unemployment rate would likely rise. Given that the oil, gas and petrochemical sectors, according to the Central Bank data, also showed sharp contractions, it is likely that the current account (deficit) would worsen, and the State may very well find itself with less than the ($53.4 billion) projected fiscal revenue it anticipated for fiscal 2017.” Read more

Source: Trinidad Express