Home' Trinidad and Tobago Guardian : January 2nd 2014 Contents The Central Bank s economic
growth projection of 2.5 per
cent in 2014 is a realistic one,
said Dr Roger Hosein, senior
lecturer, Trade and Economic
Unit, University of the West
Indies (UWI), St Augustine.
"The natural gas maintenance by the major
companies has been completed. Our trading
partners have been returning to something
closer to a more stable level of growth, even
if at a new lower normal. The price of oil is
expected to average around US$95, although
a few conservative estimates have gone as low
as US$70," Hosein told the Business Guardian
In December, the Central Bank released its
Monetary Policy Report where Finance Minister
Larry Howai announced a 1.5 per cent eco-
nomic growth in 2013 and 2.5 per cent in 2014.
The report states that the T&T economy
grew by 1.2 per cent in 2012, following an
annual average rate of decline of 2.3 per cent
over the period 2009-2011.
Revised estimates from the Central Bank
indicate that real gross domestic product (GDP)
increased on average by 2.3 per cent (year-
on-year) in the first half of 2013.
Economic activity in 2012 and in 2013 has
been driven by the non-energy sector as pro-
duction in the energy sector was affected by
large-scale maintenance activities and other
unplanned stoppages. During the third quarter
of 2013, maintenance work was conducted by
two major gas producers.
Hosein believes there is a strong possibility
for energy revenues to return to a "healthy
state" in 2014.
"My own take is that given the return to
growth in major economies, such as the USA
and the prospect that economy can return to
full employment by next year, then oil prices,
even amidst enhanced shale gas production
would hover close to US$100 a barrel. This,
alongside the decline in the slide of crude oil
production in recent times, would see energy
revenues remain healthy," he said.
Despite this, he said, the Petrotrin spill leaves
a "question mark" and some uncertainty about
its effects on the economy.
He added, "If maintenance work is to be
undertaken and dampens output level, this
would adversely affect economic activity in
"Also, what if the frequency of oil spills
were to spread and continue to other areas?
This would be disastrous and so the state has
to do everything necessary to bring this to an
immediate and conclusive end. If sabotage is
involved as some commentators have said,
then the perpetuators must feel the extreme
end of the law as this can derail the entire
growth projections for 2014 and paint a terrible
picture to future investors."
He said the floods that hit the Eastern
Caribbean countries last week and the Petrotrin
oil spill may have an effect on the Central
Bank s projected growth of 1.5 per cent eco-
nomic growth for 2013.
"As the first-ever T&T Extractive Industries
Transparency Initiative Report (EITI) report
recently showed, the second largest source of
government revenues was Petrotrin---that is
a big player---and the events associated with
the recent oil spill of Petrotrin may cause this
sector s revival in the last quarter of the 2013
to be less than the modified forecast of 1.5 per
cent stated by the Central Bank in its recent
Monetary Policy Report. No doubt in the flood-
hit OECS region, there may be a decline,
although not extensive, of our export products,"
Shale gas and the T&T market
Hosein referred to the rise of shale gas in
the US and its impact on T&T.
"Some commentators have said the unlock-
ing of vast reserves of shale gas in the USA
will not really affect the T&T economy as
world demand for energy products has been
growing. And, as for concerns about liquefied
natural gas (LNG), for example, we were able
to shift our exports from the USA to other
more lucrative markets. But note this, after
2009, the coupling relation between oil prices
and gas prices that persisted for many years
have been broken, and based on the data up
to October 2013, the trends in these two vari-
ables have been going in opposite directions.
This means that into the future, we may be
seeing possibly lower market prices for our
more buoyant natural gas intensive products,"
Richard Young, chairman of the Economic
Development Board and former head of the
Bankers Association of T&T (BATT), agrees
with the Central Bank s projection and believes
there will be economic growth in 2014,
although this growth is "debatable."
"We should see some growth in 2014. I
understand all major maintenance in the energy
sector has been done, so that sector should
"There is certainly a lot of consumer spend-
ing as the citizenry continues to ensure T&T
remains in the top quartile of The Happiest
Country in 2013. In 2012, we were 31 out of
156 countries! Ironically, Singapore was 30th.
Alas, if only we could be like Singapore!"
The "challenge," he said, would be effective
execution of how the Government conducts
"With the biggest ever national budget, we
all anticipate government ramping up its
spending. The challenge with all governments
is to execute and implement. To me, this is
where the hurdle is. Spend will certainly take
place, but whether the country gets value for
money will be left to be seen," he said.
Young said diversification of the economy
is important in maintaining economic growth.
"If we can mobilise the country to truly
diversify our economy, taking advantage of
the low interest regime, we may see an increase
in commercial lending, something that has
been eluding us for the last few years. That
would be one of my wishes for 2014," he said.
Young said the success of the economy not
only depends on statistical data and the macro
economy, but also on T&T developing a new
culture that gives rise to sustainable growth.
"On the more philosophical front, I wish
the country can embrace better governance
making integrity part of our DNA. We are
truly lacking in this value at both private and
public sectors. I also wish to see less controversy
in the country. It looks like a regular feature
of T&T as we experience it daily, and some-
times I get the feeling that we like it so! No
need to mention crime as that should be on
everybody s list," he said.
Summary of Central Bank report
In the 2013/2014 fiscal budget, government
revenue is expected to amount to $55 billion,
while expenditure is expected to increase to
$61.4 billion, resulting in a deficit of $6.4 bil-
lion. Meanwhile, capital expenditure is bud-
geted at $8 billion, the highest budgeted level
on record. It is expected that the Government s
capital expenditure programme, if implemented
as planned, should provide some impetus to
Improving economic performances in
advanced economies are expected to drive
global growth in 2013 and 2014. The IMF notes
that this represents a changing growth dynam-
ic, as previously growth was driven by emerging
markets. The IMF s World Economic Outlook
October 2013 indicates the global economy is
expected to grow by 2.9 per cent in 2013 and
3.6 per cent in 2014.
Advanced economies are projected to grow
by 1.2 per cent and 2.0 per cent in 2013 and
2014, respectively, while emerging markets
are forecasted to expand by 4.5 per cent in
2013 and 5.1 per cent in 2014.
For T&T, the significant maintenance work
in the energy sector has been completed; as
such growth prospects over the short term
are positive. Output in the upstream and down-
stream industries is expected to return to more
normal levels in the closing months of 2013
and in 2014.
In addition, drilling in the shallow water
acreage in blocks, which were awarded in 2010,
should commence in 2014. Further, the recent
onshore bid round attracted 11 bids, repre-
senting the highest level of interest in approx-
imately 30 years.
It is expected that award of the blocks for
the April 2013 bid round will be announced
in January 2014, and this may lead to explo-
ration activity in these blocks in late 2014 to
BG4 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt JANUARY 2014 • WEEK ONE
projection of 2.5%
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