Jul 2016 Financial News

Eclac says 2.5 per cent decline for T&T

Jul 27, 2016

The Economic Commission for Latin American and Caribbean (Eclac) says T&T will suffer a -2.5 per cent economic contraction this year.

In its latest Economic Survey of Latin America and the Caribbean 2016 released in Santiago, Chile, yesterday, the UN agency listed this country among six the region expected to suffer declines this year. The others and Venezuela, Suriname, Brazil, Ecuador and Argentina

The Caribbean will suffer a 0.3 per cent contraction in its gross domestic product (GDP) and there will be a 0.8 per cent contraction in growth rate for Latin America and the Caribbean overall—a steeper decline than the 0.5 per cent recorded last year.

Eclac said the data underscores the urgent need to mobilize public and private investment to promote the region’s economic recovery and meet the challenges imposed by the 2030 Agenda for Sustainable Development.

“The capacity of countries to accelerate economic growth depends on the spaces for adopting policies that support investment. These policies should be accompanied by efforts to change the conversation between the public sector and private companies. Increasing productivity is also a key challenge for moving forward along a path of dynamic and stable growth,” said Alicia Bárcena, Eclac Executive Secretary during a press conference for the launch of the report.

The survey indicates that in the external arena, the global economy will maintain low levels of growth, which will be accompanied by a slow expansion in trade, which has not managed to recover the levels seen before the international financial crisis. On top of this, the report points to deteriorated prices for the region’s commodities exports and greater international financial uncertainty and volatility, which have increased since the United Kingdom voted to leave the European Union (Brexit). This decision has also produced greater risks to the world’s future growth.

In the regional sphere, the report forecasts a -2.1 per cent contraction for South America, mainly due to a deterioration in its terms of trade, weaker external demand and a significant deceleration in domestic demand, which reflects a sizeable fall in domestic investment.

Central America will grow 3.8 per cent thanks to the boost coming from its improved terms of trade (resulting from lower hydrocarbons prices), the recovery of its external and domestic demand, and increased income from remittances.

On the other hand, regional growth will be led by the Dominican Republic (6.0 per cent), Panama (5.9 per cent), Nicaragua and Bolivia (4.5 per cent), and Costa Rica (4.3 per cent).

“Faced with an economic contraction, the region needs progressive structural change with a big environmental push that promotes development based on equality and sustainability, as we have proposed in our institutional document Horizons 2030: Equality at the Centre of Sustainable Development, which we presented in Mexico last May,” Bárcena said.

According to the Eclac report, economic deceleration will have an impact on the urban unemployment rate, which in 2015 was 7.4 per cent and which is expected to increase to 8.1 per cent this year. Inflation, meanwhile, should behave similarly to that of last year, with greater pressures on southern economies.

The agency said resuming the path of growth and mobilizing financial flows for development financing requires that countries must change their fiscal structures to improve tax collection and progressivity, strengthen income taxes (both for individuals and companies), and fight tax evasion and avoidance, which reached the equivalent of 6.7 points of the regional GDP in 2015 at an estimated US$340 billion.

Additionally, it is necessary to promote renewed public-private coalitions and policies that create appropriate incentives to channel financing towards development goals. Also, financial inclusion should be strengthened as a policy of productive insertion through the creation of markets and new innovative instruments.

Source:
Trinidad Guardian
Wednesday July 27, 2016

http://www.guardian.co.tt/business/2016-07-26/eclac-says-25-cent-decline-tt