PLEASANT MEETING: Central Bank Governor Jwala Rambarran, centre, greets president of the Penal/Debe Business Association Sahid Hosein at the bank’s inaugural Monetary Policy Forum at National Energy Skills Centre, Debe, yesterday. This was the first time the bank ventured from Port of Spain to release its Monetary Policy Report, in an effort to hear directly the concerns and opinions of businessmen around the country. Looking on is Rajkumar Gheseawan, vice-president of the Siparia Chamber of Commerce. —Photo: DEXTER PHILIP
Central Bank revises 2013 growth down to 1.5%
Carla Bridglal email@example.com
Just two weeks before the New Year, the Central Bank has 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 overall projection for 2013 is 1.5 per cent economic growth.
In January, the bank had projected 2.5 per cent economic growth for 2013; the International Monetary Fund (IMF) in March projected 1.5 per cent. At its Monetary Policy Report for April 2013 yesterday, the Bank maintained its 2.5 per cent outlook based on projected growth in energy output by 1.8 per cent.
“That projection was made almost to the end of 2012. At that time we did not have the benefit of the information of what would have taken place September this year, and it’s when we got the September information we factored it into our projections,” Central Bank governor Jwala Rambarran said.
He was speaking yesterday at the Bank’s inaugural Monetary Policy Forum, and release of the Monetary Policy Report for November at the National Energy Skills Centre, Debe.
In the third quarter of 2013, the country underwent its largest co-ordinated energy maintenance effort to date.
“The subsequent shortfall in natural gas production, while anticipated, adversely affected both refining activity and output of petrochemicals, generating a decline of four per cent in energy output, and an estimated contraction of 0.5 per cent in real GDP,” Rambarran said.
Nevertheless, despite a murky, “unusual” international outlook that still suggests sluggishness in developed markets and slowdowns in major emerging markets like Brazil, Russia, India and China, Rambarran said the domestic economic conditions were “very encouraging”.
“It is definitely not all doom and gloom,” he said.
“The Trinidad and Tobago economy has shown tremendous resilience against a turbulent global backdrop, and we are seeing signs of gradual recovery from the sharp downturn that started late 2008,” he added.
While businesses have reported a slowdown in activity because of elections, on a macroeconomic level, Rambarran said energy sector maintenance “overshadowed everything”.
“We’ve kept emphasising that particular message. Now that this has been completed we expect to see a return to more normal levels of production. Despite four elections and burst of activity (that) would have helped non-energy sector, but by and large the mere fact you had this big maintenance in September is what really compressed the overall level of growth. The last two years show how vulnerable we are to the energy sector. Large-scale maintenance by one energy company has been able to basically dampen the overall growth process. It means we have to diversify,” he said.
On the other hand, the non-energy sector continued its slow but steady pace of revival, he said, providing support to the overall economy but still not enough to fully offset the drag posed by maintenance activity in the energy sector.
The non-energy sector has registered growth for the past ten quarters to September 2013, he added, supported by the finance, construction and distribution sectors.
Rambarran added that inflationary pressures eased over the course of 2013; headline inflation at the beginning of the year was just over seven per cent, and slowed to about 4.5 per cent by November.
He said the bank was concerned it was yet to see a pickup in business lending. Business loans from banks contracted for eight consecutive months up to September.
The bank also saw relatively strong growth in consumer lending, especially for purchases of motor vehicles, home renovation and debt consolidation. The vehicle series ‘PDA’, he added, sold out in a record three months.
The demand for imported goods and services has been quite robust. The bank has intervened deliberately into the foreign exchange market, selling US$1.3 billion to authorised dealers, compared the US$1.7 billion a year ago. At the end of November, Rambarran said, the country had gross official reserves of US$9.3 billion, or almost a year’s import cover.
For 2014, the bank projects a 2.5 per cent growth in GDP.
“Certain domestic factors seem to suggest a more optimistic outlook for 2014,” Rambarran said.
These include a return to normal levels of energy output now that maintenance is over; increased exploration and production activity; improvement in the pace of project implementation at the level of central government; fewer credit constraints for business; and a final resolution for the CLICO issue.
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