Home' Trinidad and Tobago Guardian : March 17th 2016 Contents BG6 NEWS
BUSINESS GUARDIAN www.guardian.co.tt A C 7 0 6
There has been a greater
dependence of the
T&T economy on the
petroleum sector over
time, says economist
Dr Roger Hosein, who sat down with
the Business Guardian recently and
outlined the country s economic
growth and dependency over the
He suggested that in order to move
forward, there were a number of
interventions that the T&T economy
may wish to consider at this critical
time. Some of these included:
• Devaluation of the dollar
• Role of EXIMBank and Export
• Use of eTecK parks
He said petroleum value added as
a proportion of total value added
increased from 29.17 per cent in 1955
to 41.6 per cent in 2014.
"In the time period, 1974 to 1978,
the average annual value of this ratio
was 41.12 per cent and for the period
1982 to 2003 this ratio had an annual
average value of 26.3 per cent.
"Between 2004 until 2014, the
average annual value of this variable
climbed to 43.2 per cent, as the nat-
ural gas sector boomed," Hosein said.
t & my
As a per cent of total government
revenues, oil revenue declined from
47.7 per cent in 1955 to 36.25 per
cent in 1970, as production fell with-
out any considerable upward move-
ment of oil prices.
Hosein said in the 1970s the share
of oil revenues as a percentage of
total revenues increased to 71.1 per
cent in 1980, as both the price and
the production of crude oil improved
at the same time.
"In this regard, it was noted that
the decisive factor in the develop-
ment of T&T has been the increased
revenues of the country, resulting
from the rise in oil prices since the
end of 1973.
"For the five years 1969 to 1973,
total current receipts were $1,833
million or an average of $366 million
on an average per year. The receipts
in the second five-year period were
six times the receipts of the first
He said data showed that the
immediate result was a massive
increase in public expenditure and
the annual generation of impressive
However, as both the price and
production of crude oil waned during
the 1980s, so too did the share of
oil revenues in total revenues and by
1998, this ratio receded in value to
11.96 per cent of total revenues. By
2014, oil revenues, as a proportion
of total government revenues
increased to 36.2 per cent as oil prices
improved sharply from US$14 in
1998 to US$100 a barrel by 2014.
Hosein said, "It is well known that
the petroleum sector attracts most
of the foreign direct investment (FDI)
into the T&T economy.
"In this regard, the share of petro-
leum foreign direct investment as a
percentage of total FDI climbed from
74.8 per cent in 1975 to 94.3 per cent
The share of energy sector exports,
treated as the exports of international
trade classification section three and
section five, was 83.8 per cent of
total export revenues in 2013.
After the coming on stream of the
first Atlantic LNG plant in 1999, the
share of petroleum exports in total
exports have persisted above 70 per
"In the medium term, as the econ-
omy diversifies at best at a very slow
pace, this is unlikely to change,"
From another perspective, in 1961
the economy s unemployment rate
was 13.1 per cent and its current
account balance was negative.
For the period 1966--1970, the
unemployment rate averaged 14.1
per cent as compared to 6.5 per cent
in 1955. As unemployment grew
Hosein said, "Discontent grew in the
economy and in 1970 the Black
Power rantings took centre stage.
"The government responded to
the problem the only way it could,
by throwing fiscal caution to the
winds and hiking government spend-
ing from $390 million in 1970 to
$556.2 million in 1973."
m v w
The appreciation of the real effec-
tive exchange rate by about 75 per
cent between the start of the com-
modity supercycle in 1998 and 2015
would no doubt have partially eroded
the external competitiveness of firms
operating in the non-booming trad-
able sector of the T&T economy,
according to Hosein.
He said that one of the main
underlying causative reason was a
faster increase in relative domestic
prices as compared to the relatively
small nominal depreciation of the
nominal bilateral exchange rate with
the USA in particular.
He said: "It must be acknowledged
that it is difficult to have a compet-
itive company in an uncompetitive
Against this backdrop, Table 1
illustrates data for the Global Com-
petitiveness Index (GCI) rank for
T&T, and two comparator
economies, Barbados and Costa Rica.
The table indicates the relative back-
wardness of the T&T economy in
relation to these two comparator
w 144 t t t
2014/2015 C t, &
89t B C t .
C t t m
v t t t t t & w
w m v y t v t t
m t C .
m t t
t t t t m v
& ' C y t t
v m m t . (
t v m t
y, t , w
t t t , m
t t, t -
t ty t v t ).
A t t , t :
w u u
u , .
u $7 $8 $9
$ u y -
u , C B u
w u y
u u .
& , u
y u B .
C , w w 973.
, " -
y & .
, y y -
u y u
) w ( -
w , u
y u , y
u y - .
u y u -
B u u
u - y
v tm t
- y ,
( ) w
u u w - y -
u u -
u w & y u
A , " y -
w , u y -
u y, w u , -
y w , u y
" , 7
u u u u y
" u w
u u w
/ w u .
, , w u
u u u y.
u u .
u u -
u y u u , -
y u .
" y u
y u y -
'Consider fully floating currency'
Roger Hosein on local economy...
009/ 0 0
0 0/ 0
0 / 0
0 / 0 3
0 3/ 0 4
0 4/ 0 5
(Source: Global Competitiveness Report)
AB 1: BA C ( C ) C C
. m y . .tt
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