THREE WEEKS before Christmas, the Central Bank has announced that this country is officially now in a recession.
Central Bank Governor Jwala Rambarran, at a monetary policy forum at the Hyatt Hotel Port of Spain on Friday, said this is in light of continued declines in real Gross Domestic Product (GDP). He said this country suffered its fourth consecutive decline.
He said noticeable signs of the recession will start to set in next year, as businesses begin to cut back on investments, consumers hold back on spending and banks loans become fewer.
A recession, which is a sustained period of general economic decline, is defined as a decline in GDP for two or more consecutive quarters.
WHERE DID THE FOREIGN EXCHANGE GO?
The Central Bank Governor provided some answers as to where the billions of dollars pumped into the financial system over the last three years ended up.
He labelled the Retail and Distribution sector as “the most voracious consumer” of foreign exchange, swallowing up almost US$4.5 billion in a three year period. He revealed that the major user of the currency in that sector was American warehouse chain, PriceSmart, which consumed US$507 million. The other top users in that sector were:
- Courts (US$198)
- Smith Robertson and Company (US$169million)
- A.S. Bryden (US$153 million)
- Massy Distribution (US$136 million)
Credit card payments accounted for US$1.8 billion over the past three year, Rambarran said.
He went on to caution consumers on depending heavily on imported goods.
“The current shortage of US dollars will not be solved unless we dramatically change of consumer-driven, heavily import-dependent behaviour. The import content of our consumer spending is at least 80 per cent.”
“Look at our exuberant behaviour during Black Friday, just one week ago, with shoppers camping outside the doors of wholesalers waiting eagerly to pounce on that must-have imported JVC 43-inch television priced at US$400.”