Home' Trinidad and Tobago Guardian : May 4th 2017 Contents MAY 4 • 2017 guardian.co.tt BUSINESS GUARDIAN
NEWS | BG5
Low 2017 growth no
cause for undue worry
Economist Dr Ronald Ramkissoon says T&T
should not be worried that the International
Monetary Fund (IMF) is lowering its growth
projection for the country's economy in 2017.
"I am not unduly worried. I would not get
worked up over the fact that growth is small. For
obvious reasons such as the performance of the energy sector
which has historically been the driver of growth in the rest of
the economy. We know what is happening on the production
side and on the prices side," he told the Business Guardian by
phone last week.
The IMF in its World Economic Outlook report from Wash-
ington DC on the same day was less optimistic and projected
0.3 per cent growth for T&T, a lowered forecast from its initial
projection of 1.8 per cent.
The World Bank in its semi-annual report week before last,
projected 2.3 per cent gross domestic product (GDP) growth
for T&T in 2017.
The IMF also cut its projected growth for Latin America and
the Caribbean as a whole by 0.5 per cent for 2017.
T&T received further bad news later that week when inter-
national ratings agency---Standards and Poor's (S&P)---stated
that it lowered its long-term sovereign credit ratings on the
country to BBB+, from A-, but changed the country's economic
outlook to stable. In its ratings announcement, S&P said the
change was based on the country's higher debt burden.
Ramkissoon, who has spent decades analysing economic
data, said forecasts are not rigidly set in stone.
"Forecasts are just that---forecasts. So that by the time fore-
casts are done, you give your best judgment and things evolve.
Therefore we observe and pay attention to the IMF and World
Bank reports and we move on. The key thing is that we do not
allow ourselves to be left behind. In the case of T&T we know
what has to be done."
Ramkissoon said T&T has to make the necessary "adjust-
ments" if the economy is to be turned around.
"While we pay attention to some of the activities that would
generate growth. We have to be careful that we do not gen-
erate growth which is, in fact, foreign currency dependent or
that leads to major demands in foreign currency. Because then
the country would have another problem if the growth that
is generated is not based on exports. Because then the coun-
try would have a foreign exchange problem. So it is striking a
balance what we need to be able to achieve in the short term
while we address some adjustment issues which we have not
dealt with for a long time," he said.
"The country needs to do more and the country needs to
move faster," he said.
Hosein: Not good news
Dr Roger Hosein, senior lecturer in economics at the Uni-
versity of the West Indies (UWI), told the Business Guardian
last week by email that the IMF's lower growth forecast for
T&T in its latest publication is not good news.
"Already the IMF has lowered its growth forecast for T&T's
economy away from the 1.8 per cent it forecast last year (for
2017) to a paltry 0.3 per cent in its April 2017 publication. This
is not good news for investors at all and comes at a time when
we have just lost a major platform building opportunity for
He warned against some sectors of the country pressuring
the Government for increased wages at a crucial time in the
"It is also not a good time for groups to be seeking wage
increases that outstrip productivity growth and it is certainly
not a good time for bad governance. All hands need to pull
in the same direction or else the T&T ship would not move
properly and may even sink a bit more."
Hosein spoke about the "sorry state of the economy" and
justified this by saying that not enough was saved during the
"After 2010, even though natural gas production peaked
the state continued to spend in nominal terms and by 2015
total government expenditures remained at TT $61.3 billion.
The appetite for transfers and subsidies did not show signs
of relenting and stood at 51.4 per cent of total government
expenditure in 2015 as compared to 21.4 per cent in 1999. By
2016/17, the state had a debt of TT $88 billion, a debt to GDP
ratio of 60.8 percent and a period of economic stagnation that
ran from 2009 to 2016.
"This is a sorry state of affairs for an economy producing near
one billion barrels of oil equivalent between 1999 and 2016."
World Bank report
According to the World Bank Semi Annual Report two weeks
ago, GDP in the Latin American and Caribbean (LAC) region
fell by 1.0 per cent in 2016.
The bank said that this negative regional growth rate was
driven by the lackluster performance of four relatively large
• Venezuela, (-12.0 per cent),
• Brazil (-3.6 per cent),
• Argentina (-2.3 per cent), and
• Ecuador (-2.1 per cent), which together account for around
54 per cent of the region's GDP.
"However, three small economies that are also net exporters
of commodities (Suriname, T&T, and Belize) experienced GDP
contractions in 2016 as well. Thus, the adjustment processes
triggered by the end of the commodity boom a few years ago
are still being felt throughout the region, engulfing large and
small economies alike."
The World Bank stated that as in past editions of this semi
annual series, the rest of the report is organised around two
chapters. The first reviews the growth prospects of the re-
gion for 2016 and 2017 in light of its performance since the
beginning of the 21st century and of the performance of the
"As the global economy has slowed down since 2011, the LAC
region has faced various challenges, including fiscal pressures
especially in commodity-dependent economies ranging from
Mexico and Colombia to T&T," the report stated.
Economist Ronald Ramkissoon:
We have to be careful that we do not
generate growth which is, in fact,
foreign currency dependent or that leads
to major demands in foreign currency.
Dr Ronald Ramkissoon
It is also not a good time for groups to
be seeking wage increases that outstrip
productivity growth and it is certainly
not a good time for bad governance.
Dr Roger Hosein
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