Jan 2010 Financial News

Williams wants more diversity

Jan 25, 2010

The government sector is carrying the local economy. This is not sustainable and measures must be taken to give the private sector the confidence to restart investments in productive projects, said Central Bank Governor, Ewart Williams. “The uncertainties that surround our energy sector including maturing fields, the pressures to reduce global energy demand, combined with the international financial crisis, make it very clear that there should be alternative growth sources to compliment the energy sector. “This is the only way we can maintain our living standards in the long term,” added Governor Williams. In a presentation to members of the Employers Consultative Association at the launch of a business forum to mark their 50th anniversary last Thursday at the Hyatt Regency Hotel, Port-of-Spain, Williams said that meaningful economic diversification should be the main policy of the country. He said incentives are also important in the diversification thrust of the economy of T&T, and it will give business, investors and corporate T&T the direction they need to diversify away from energy.

Williams noted that from the surface, the private sector lost a golden opportunity in the early part of this decade, to invest in building capacity productivity and competitiveness as they did in the 1990’s. He said only after the downturn starts to take its impact, then government and the private sector begin to seriously look at tourism, agriculture and communications technology. This should be something that should be done while the economy is buoyant, and we have the confidence and investment resources to build capacity. After the economy starts to turn downwards, the private sector loses that confidence to invest as the future became more uncertain. As a result the business sector started to hold back resources and pull back on investment and factory expansion. “Over the past few months you can see this with the reduction in imports for construction materials and the reduction in loans for real estate development and construction projects.

He noted that T&T’s economy has suffered four consecutive quarters of negative growth. “Our economy faces immediate and longer term challenges. Our immediate challenge is to spurn economic recovery after the prolonged downturn.” Williams said that later in the day the Central Bank would be announcing data for 2009, which suggests that real growth declined again for the third quarter of the year making it the fourth consecutive quarter of GDP decline. “After increasing by 14 per cent in 2008, bank credit outstanding has declined by four per cent in 2009. The absence of credit demand is reflected in excess levels of excess liquidity and a historically low savings rate,” he said. Williams pointed out that there must be resurgence in private sector activity to sustain the economy. “We need to devise new strategies to maintain our growth momentum... And economic growth on a sustained basis could only be sustained by the private sector. It’s going to be the non–energy private sector to take us the rest of the way,” he said. He warned that T&T must urgently develop alternatives to the energy sector.


Source:
Raphael John-Lall
Trinidad Guardian
Monday January 25 2010

http://guardian.co.tt/business/business/2010/01/25/williams-wants-more-diversity