Home' Trinidad and Tobago Guardian : November 17th 2016 Contents BG4 COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt NOVEMBER 17 • 2016
Gabriel Faria, CEO, T&T
Chamber of Industry and
Commerce, says the latest
economic data from the Cen-
tral Bank shows that it cannot
be "business as usual" in the
"The recent financial results of public com-
panies show a mix of performance with most
public companies posting declines in profitability
ranging from as bad as 70 per cent on prior
year, while another was down 30 per cent," he
told the Business Guardian in a statement on
He added that stakeholders need to "inter-
rogate" the statistics to understand fully what
is happening in the different sectors of the
"We need to interrogate the numbers more
to understand the details by segment, but unless
all stakeholders---government, labour, business
and consumers---come together with a con-
gruence of goals, we run the risk of seeing fur-
ther declines. This is not the time to complain
but to agree on shared solutions which we can
implement," he said, adding that there will be
no individual winners if the country fails.
"Businesses are already absorbing significant
increases in costs and taxes to maintain con-
sumer demand. This will mean lower dividends
and this will impact on the institutions that
are shareholders. We all have to take a long-
term view on doing what is right for T&T," he
According to the Central Bank s Monetary
Policy Report released last Friday, the gross
domestic product (GDP) of the economy
declined by 6.7 per cent in the first half of 2016,
one of the steepest declines in decades.
Some of the data from the report show that
headline inflation stood at three per cent in
September 2016, the energy sector declined by
12.6 per cent in the second quarter of 2016,
while the non-energy sector decreased by 5.4
per cent for the same period.
The Index of Retail Sales declined by 1.6 per
cent in the second quarter of 2016 partly as a
result of a sharp fall off within the construction
materials and hardware subsector.
Central Bank Governor, Dr Alvin Hilaire, said
T&T is in the early stages of an economic
"Re-engineering would require a major long
term effort. Everyone needs to be part of it.
There needs to be a concerted effort to improve
the revenue sources and to get away from the
reliance on energy. The way of doing business
and the efficiency of the economy needs to be
shored up. As the government needs to roll
back its activities, the private sector needs to
take a greater role," he said.
Economic decline expected
Economist Dr Ronald Ramkissoon is not sur-
prised by the sharp decline in the GDP for the
first half of 2016.
"For those of us who have been following
the prices and production of our major com-
modities there is no surprise. The non-energy
sector is influenced by the energy sector. Gov-
ernment s expenditure has come down which
it needed to do. It is how an open petroleum
economy operates. This is why economists cau-
tion why we should behave in a particular way
and why we should not over spend," he said.
He cautioned analysts who compare the 6.7
per cent decline of GDP in the first half of 2016
to the early 1980s where there was an 11 per
cent decline of GDP in 1984 and high unem-
"The 6.7 per cent is a decline for six months
and the eight per cent decline is for the second
quarter. So we must be careful not to compare
estimated data. The Central Bank also has its
own way of calculating quarterly GDP as
opposed to what the Central Statistical Office
(CSO) would do at the end of the year. A decline
in an economy is not something that you are
happy about but it is the reality of T&T and
reinforces the message that needs to be sent
to the national community of the challenging
times that we are in," he said.
According to information from the Central
Bank, GDP is the total monetary value of final
goods and services produced within a country
in a particular time. It counts all the output
produced within the borders of a country. GDP
can be nominal or real. Nominal GDP includes
effects of price changes on the value of output,
while real GDP removes the effects of price
changes so that the movement in output can
The CSO is also the official source of data
in T&T and it is used by the Ministry of Finance.
The Central Bank s information also stated
that notwithstanding the Central Bank s estimate
for GDP for the first of 2016, using its own
methodology, the CSO has estimated the decline
for 2016 to be 2.3 percent which is the figure
used by the Ministry of Finance in the Review
of the Economy 2016.
The Central Bank also projected a 1.6 per
cent GDP growth in 2017 and Dr Ramkissoon
believes that this is highly possible.
"Do not forget that the IMF has a 2.7 per
cent GDP growth in 2017. It is early days yet
and we still have the next six month forecast
for this year but in 2017, there is a reason why
there will be some growth. It is going to be
marginal. There will be certain projects coming
on stream, phase three of BHP. There are some
projects likely to bring output of gas and oil
and that may make some change to energy
output," he said.
He also said the country has to wait and see
how much of the Government s capital expen-
diture will come on stream in 2017.
"That is going to be critical to 2017. We are
in a very challenging period of economic adjust-
ment and we want to make the necessary
adjustments to our income. At the same time
we must see what additional opportunities are
out there for additional or new exports of goods
and tourism," he said.
Worst in decades
University of the West Indies (UWI) senior
lecturer, Dr Roger Hosein told the Business
Guardian on Tuesday that the performance in
the second quarter of 2016 was the worst in
decades, using quarterly data for the time period
"This points to a flaw in the simplistic policy
strategy adopted to manage the T&T economy
which is founded on producing more hydro-
carbon products to allow the economy to grow.
The turning point will be the Juniper project
at the start of the third quarter of 2017 but this
will not last very long and so the search for the
real solutions to trigger long-run sustainable
growth remains alive," he said.
He said the fall in energy production was
largely responsible for the "sharp decline."
"In August 2016, natural gas production was
2,776 mmcf/d as compared to 3,876 in Decem-
ber, 2015. This is a sharp decline motivated by
shutdowns by some of the production facilities
by some multi-national companies in T&T.
Apart from gas, oil production also fell from
86,000 barrels per day in October 2014 to
65,200 in August 2016, a decline of 24 per cent
in a very short period of time," he said.
Economy declines by 6.7% in first half...
Nobody wins if T&T fails
DR RONALD RAMKISSOON
DR ROGER HOSEIN
Continued on Page 5
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