Feb 2010 Financial News

Fewer loans, less spending in 2010

Feb 03, 2010

Trinidadians and Tobagonians are buying fewer cars, building fewer homes and spending more on their credit cards

These and other economic indicators from the Central Bank suggest that the local and regional economy will continue to see tight times through 2010.

In its Summary of Economic Developments, released two weeks ago, the Bank observed notable contractions in the local economy from shrinkage in the banking sector, retail sales, real estate and the labour force.

Most of these indicators picked up speed in the third quarter of 2009 and may make a turnaround difficult or impossible in 2010.

Under ’Gross Domestic Product’, the Trinidad and Tobago economy contracted by 5.6 per cent in the third quarter of 2009, on a year-on-year basis.

In the energy sector, activity declined by 3.8 per cent and in the non-energy sector, by 6.8 per cent. This is on a year-on-year basis to September 2009.

Regionally, the real GDP in Jamaica fell by 2.3 per cent and next door, in Barbados, by 6.3 per cent.

’Domestic Prices’ shows that food prices increased by 0.4 in the 12 months to November 2009, while producer prices rose 3.4 per cent in the 12 months to December 2009.

In ’Commodities’, while the price of crude petroleum at December 2009 was US$74.5 per bbl, a 79.7 per cent increase from a year earlier at US$41.5 per bbl, the price of T&T’s main export, natural gas, was US$5.3 per mmbtu (Henry Hub) - 8.6 per cent lower than in December 2008.

In ’Monetary Aggregates’, commercial bank credit to the private sector contracted by 4.4 per cent on a year-on-year basis to November 2009.

Consumer credit also contracted, by 4.8 per cent in the 12 months to November 2009.

Credit to businesses declined by 6.1 per cent in the same period, while real estate mortgage lending grew by 9.6 per cent for the same period.

Further into the real estate sector, residential median house prices fell to $975,000 in September 2009, a decline of 9.3 per cent for the same period in 2009.

New residential mortgage loans approved and disbursed for September 2009, declined by 18.6 per cent and 16.1 per cent respectively, compared with September 2008.

In the indicators of construction activity, the retail price of half-inch steel fell by 44.8 per cent on a year-on-year basis, to reach TT$29.00 in December 2009. Quarter-inch steel fell by 39 per cent.

Overall, ’Retail Sales’ declined by 1.9 per cent in the quarter ended September 2009, compared with the corresponding period in 2008.

The major declines came from the areas of Motor Vehicle and Parts, Textile and Wearing Apparel and Construction Materials and Hardware.

New motor vehicle sales fell by 31.7 per cent, on a year-on-year basis to December 2009, with the sales of private passenger vehicles and commercial vehicles falling by 31.9 per cent and 31.5 per cent, respectively.

At the end of November 2009, the value of outstanding credit card loans was $1,770 million, an increase of 6.6 per cent over the value in November 2008.

In the Equity markets, the T&T Composite Index declined by 9.2 per cent in the 12 months to December 2009.

In the quarter ending December 2009, the unemployment rate rose to 5.8 per cent, increasing from the 5.1 per cent recorded in the first quarter.

On a year-on-year basis to September 2009, employment fell in the following sectors - construction (3.4 per cent), agriculture (4.7 per cent), energy (1.4 per cent) and service (4.2 per cent).

The Bank’s ’Summary Economic Indicators Bulletin’ (SEIB) will be published on a quarterly basis, with the March and September editions for 2010 coinciding with its semi-annual Monetary Policy Reports.


Source:
Kim Boodram
Trinidad Express
Wednesday, February 3rd 2010

http://www.trinidadexpress.com/index.pl/article_business_mag?id=161590799