MADRID: T&T‘s gross domestic product (GDP) has declined by an estimated 6.7 per cent in the first half of the year, Dr. Sandra Sookram, Deputy Governor, Monetary Operations at the Central Bank said yesterday.
Like most energy exporting countries, T&T’s weak economic performance in 2015 and mid 2016 has stemmed largely from the energy sector. In addition to the impact of the declining rates of extraction on the oil and gas fields, energy sector output was curtailed on account of the temporary suspension of operations at two major oil companies,” she said.
“Indicators in the construction sector, such as sales of cement, ready mix concrete, all declined. This can be linked to the slowdown of the execution of the Government’s capital programme.”
Data on the state of the T&T economy was released yesterday at the launch of the latest monetary policy report from the Central Bank. The report shows headline inflation at 3 per cent in September 2016, along with a 12.6 per cent decline in the energy sector in the second quarter of the year. The non energy sector decreased by 5.4 per cent for the same period. The Index of Retail Sales declined by 1.6 percent in the second quarter partly as a result of a sharp fall off in the construction materials and hardware subsector.
Central Bank Governor Dr. Alvin Hilaire said the economic challenges facing the country should not merely be looked at as a temporary phenomenon as there is the long term need to re-engineer. He said the country is in the early stages of an economic adjustment programme.
“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. Hilaire said he does not expect to see energy prices rising in the medium term.
“Prices are expected to remain fairly flat. Opec projects that by 2020 its reference basket will be at US$60 a barrel,” he said.
On the issue of a foreign currencu shortage, Hiliare said this is also a symptom of the shortfall of revenue from the drop in oil prices. He expects the situation to worsen in the short term.
“We do recognize that there is an imbalance in the foreign exchange market. In the short run we may have some worsening of the situation based on the season demand like Christmas. We believe over the first half of 2017 things should settle and the situation in the foreign exchange market could be alleviated,” he said.