T&T in recession

T&T in recession

... Excerpt

 

By  Darlisa Ghouralal

December 4, 2015.

 

Despite assurances from government that Trinidad and Tobago would not face a blue Christmas, today it was revealed that the country's economy is officially in a recession.

 

Central Bank Governor Jwala Rambarran gave the confirmation at the Central Bank’s Monetary Policy Forum this morning, in light of four consecutive quarters of decline in real GDP this year.

 

The country will begin to feel the effects as early as next month, the beginning of the new year.

 

 

 

In an attempt to stabilise the market, Rambarran says the Central Bank will provide a pre-announced schedule of its foreign exchange interventions to commercial banks throughout 2016.

 

Speaking on government’s last injection of US $500 million to clear the backlog of trade related queues, he says the Central Bank expected that the supply would be “devoured” as the demand for foreign currency has continued to increase.

 

Despite the reversion to the foreign exchange distribution system pre March 2014, the situation with the unavailability of foreign exchange has not improved.

 

Difficult times seem to lie ahead as the Central Bank Governor noted that energy exports are expected to decline by a whopping US $600 million next year, which would result in a drop in the country’s reserves.

 

Rambarran revealed that the retail/distribution market is the top user of foreign exchange. The most voracious consumers of foreign dollars over the last three years are PriceSmart: US $507 million, Courts: US $198 million, Smith Robertson: US $169 million, A S Bryden: US $153 million and Massy: $136 million.

 

The manufacturing sector is second highest user of foreign exchange over a three year period - Nestle: US $194 million and WITCO: US $129 million. Credit cards are the third highest users of foreign exchange, he says, with US $1.8 billion being used in the last three years.

 

The last time the country reportedly faced a recession was in 2012. Central Bank statistics at the time confirmed that T&T had entered a technical recession by the end of 2011.

 

Declines were registered across energy sub-sectors in the last three months of that year and declines continued into the first quarter of 2012. Crude oil and natural gas production also suffered significant declines.