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Doubts over growth in economy

UWI economist concerned after 2nd year of forecast errors:

 As 2013 draws nearer to a close, one University of the West Indies (UWI) economist is raising a ques­tion about if the local eco­­nomy will actually record 1.5 per cent growth by the end of the year.

At the launch of its Mone­ta­ry Policy Report for November in Debe, on December 18, the Cen­tral Bank revised its overall economic growth projection for 2013 to 1.5 per cent, down from the 2.5 per cent it had maintained in May.

The Trinidad and Tobago eco­nomy grew 1.3 per cent in the first nine months of 2013, compared to 0.3 per cent for the same period last year, Central Bank data showed.

The bank has projec­ted 2.5 per cent gross domestic pro­duct (GDP) growth in 2014.

But UWI, St Augustine, economics lecturer Dr Roger Hosein is concerned about this number.

In an emailed statement to Ex­press enquiries, he said:  “The Cen-

­tral Bank downgra­ded its projection for 2013 from 2.5 per cent to 1.5 per cent and one wonders if even this can be maintained. This is the second straight year that the Central Bank has made this type of er­ror in forecasting the national real economic growth rate.”

He noted: “The margins of error also seems to be widening, and one wonders if there is scope at some point to revisit the macroecono­mic model used to forecast economic growth in the economy. 

“Even more, and in forecasting its real GDP growth, the bank needs to take into consideration the fact, as illustra­ted in the table above, that there is an element of a slowdown in the world economy and, certainly, the pace of growth of the developed economy has fal­len from almost consistently over the listed time period and may no longer carry the ‘engine-of-growth’ status that it once did.” 

Hosein also projected an impact to the local economy, brought on by developments out­side Trinidad and Tobago.

“The slowdown in the growth of the developed world would also affect tourism flows to our Caricom (Caribbean com­munity) neighbours and these, in turn, are another ma­jor export market destination for goods from T&T.  

“It is against this type of back­drop that a strategy of efficient internal demand has great merit and perhaps Government would want to pay more dedicated attention to its growth-pole exercises,” he stated.

—CR

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