Trinidad officially in recession
Bert Wilkinson | 12/10/2015, 10:16 a.m.
One by one, governments in the 15-nation Caribbean Community are beginning to complain about having a full blown or creeping economic recession brought on in part by weak international and commodity and oil prices, as well as serious foreign exchange shortages, among other ills.
Not surprisingly, authorities in Trinidad in the past week officially declared that the country’s economy, which is heavily dependent on oil and gas exports as well as related petroleum products, has experienced three consecutive quarters of decline and is on course to close the year in similar fashion.
The Trinidad economy is the biggest in the bloc of nations from Suriname and Guyana on the South American mainland to the tourist islands of the Eastern Caribbean to Belize in Central America, but persistently weak oil prices have taken a very negative toll on the economy.
Central Bank Governor Jwala Rambarran told a local forum there is no doubt the twin island republic with Tobago is in recession and its full effects will be felt early in 2016.
“Similar weak economic conditions have prevailed so far into the fourth quarter of 2015. Four consecutive quarters of decline in real GDP in 2015 means T&T is now officially in a recession. Lower energy prices also negatively impacted the domestic energy sector. This has already been reflected in job losses at some energy companies. The decision by Arcelor Mittal to idle its steel plant will not only affect energy output but also jobs,” he said, giving an example of what the economy is experiencing.
The announcement came just a few weeks after the Surinamese Central Bank made similar predictions about its country, whose economy is propped up by bauxite and oil exports, both of which have been taking a beating in recent years. The bank said recently that foreign exchange reserves have fallen from $1 billion to a mere $370 million in the past year. “Suriname is momentarily experiencing a genuine commodity shock,” it said.
The country also devalued the Surinamese dollar, sending up prices but offering hope to the export sector, which will rake in millions when receipts come in and are exchanged for a higher rate in local dollars.
In neighboring Guyana, officials are playing up the near future prospects of a humongous oil and gas find off the Guyana coast by U.S. giant Exxon Mobil in May, even as gold prices tank and the international markets for rice and sugar remain less than stellar.
Until 2015, GDP growth has been healthy, but political turmoil linked to an inactive parliament for nearly a year and a budget that was presented at least five months later than usual have not helped to increase confidence. Apart from Jamaica, the three are among the largest economies in the trading bloc.
Trinidad’s woes have also come with a healthy dose of foreign exchange unavailability problems. This situation is despite numerous interventions by the Central Bank, infusing millions into the economy only to see it disappear in a matter of days and the business community turning up cap in hand begging for millions more.
Finance Minister Colin Imbert says he will soon go to the 41-member parliament to ask it to raise government’s borrowing capacity by an additional and staggering $8 billion to pay off debts and fund development projects.
Still, Rambarran says that all the key players must come together to help turn around the situation or there will be gloom.
“We have no choice. We can and should work together to ensure we get the policies right for the country’s recovery. We will all be double damned if spite, vindictiveness and ego keep us from working together to help our country,” he warned.