Nov 2010 Financial News

T&T’s economy stagnant—Williams

Nov 05, 2010

T&T’s economy is weak and there is the possibility that there would be no economic growth for 2010. This is the projection of the Central Bank Governor Ewart Williams. “People are not spending money, consumers are not spending. They are saving. The deposits in the banking system have been increasing at a much faster rate. “The unemployment rate has increased and therefore domestic demand, which is the capacity to spend if you add the savings and the fact that fewer people are working, it means expenditures in the system are lower than they would have been otherwise,” he said.

Williams said this yesterday at a press conference at the Central Bank in Port-of-Spain where details of the Monetary Policy Report were given. Williams spoke about a continued decline in the non-energy sector. He noted that it is the sixth consecutive quarter that there has been a decline in non-energy GDP. “Several demand indicators support this picture of a very weak activity in the non-energy sector,” he said.

He itemised the demand indicators by pointing to the 18 per cent decline in retail sales in the first six months of the year, the 39 per cent decline in non-oil imports and the 12 per cent fall in automobile sales on a year on year basis to September. The unemployment rate rose from 5.5 per cent in the last quarter of 2009 to 6.7 per cent in the first quarter of 2010. The report showed energy exports declined by 10.5 per cent because of lower export volumes, particularly for crude oil. It also showed that real GDP declined by 0.9 per cent in the second quarter of 2010. Inflation surged to 16.2 per cent in August but in September declined to 13.2 per cent.

Core inflation still remains at around four per cent notwithstanding sluggish domestic demand, Williams said. The Central Bank Governor said that there were two possible scenarios for 2011. If global growth gains momentum, domestic private sector confidence recovers and household spending and private investment rebounds real GDP growth is projected at two to three per cent. “This would be barely to enough to create new jobs and a marginal reduction in the unemployment rate,” he said. However in the less favourable scenario global growth recedes with implications for energy and non energy exports. The reports states that this could lead to another year of economic stagnation.


Source:
Raphael John-Lall
Trinidad Guardian
Friday November 5, 2010

http://guardian.co.tt/business/business/2010/11/05/tt-s-economy-stagnant-williams