The words con­tract­ed, de­clined and down­ward trend ap­pear all too of­ten in the lat­est Mon­ey Pol­i­cy Re­port (MPR) re­port, dat­ed April 2012. Re­al gross do­mes­tic prod­uct (GDP) de­clined by -2.3 per cent in Q1 2011. And by -2.6 per cent . Head­line in­fla­tion went up over a 12-month pe­ri­od to 12.5 in Jan­u­ary 2011,then went sharply down to 0.6 per cent, and up again to 5.3 per cent.

Food in­fla­tion ac­counts for much of this see-saw ef­fect. "This rise in head­line in­fla­tion in the sec­ond half of 2011 was as­so­ci­at­ed with a sharp in­crease in food prices, which part­ly re­flect­ed the ef­fects of in­clement weath­er con­di­tions in the do­mes­tic sup­ply of fruits and veg­eta­bles. "By De­cem­ber, food prices had risen to 11 per cent year-on-year com­pared with a de­cline of 0.3 per cent in Au­gust. "Core in­fla­tion, how­ev­er, which ex­cludes food prices, held steady at un­der 2.0 per cent for most of 2011," stat­ed the 89-paged MPR. Pri­vate sec­tor cred­it had de­clined for 20 straight months be­fore it picked up in mid-2011. "By De­cem­ber, pri­vate sec­tor lend­ing was up by 3.7 per cent (year-on-year) com­pared with just 0.9 per cent in May 2011 and a de­cline of 2.2 per cent a year ear­li­er."

Plen­ty mon­ey

Banks have plen­ty of cash and lit­tle idea of what to do with it. T&T's liq­uid­i­ty po­si­tion has grown steadi­ly in the last few years, cross­ing the $6 bil­lion in Feb­ru­ary 2012. "With loan de­mand still rel­a­tive­ly weak and in­vest­ment al­ter­na­tives lim­it­ed, com­mer­cial banks con­tin­ued to build up ex­cess re­serve bal­ances at the Cen­tral Bank," read the MPR. "The banks' re­serves in ex­cess of the statu­to­ry re­quire­ment rose to a dai­ly av­er­age of $5.7 bil­lion in De­cem­ber 2011 from $4.6 bil­lion in Sep­tem­ber, and climbed to a record high of $6.6 bil­lion in ear­ly March 2012," the Cen­tral Bank re­port not­ed. Busi­ness cred­it went down for 23 con­sec­u­tive months be­fore signs of re­cov­ery were ev­i­dent in Oc­to­ber 2011. "En­cour­ag­ing­ly, the growth in busi­ness lend­ing has con­tin­ued in­to 2012, with an in­crease of 4.8 per cent be­ing record­ed in March," the MPR stat­ed. "A sec­toral analy­sis of com­mer­cial bank lend­ing showed year-on-year in­creas­es in loans grant­ed to the man­u­fac­tur­ing sec­tor, oth­er ser­vices and pe­tro­le­um sec­tors. "There was al­so a re­ver­sal of the down­ward trend in con­struc­tion loans, main­ly on ac­count of lend­ing as­so­ci­at­ed with high­way con­struc­tion."

En­er­gy

En­er­gy prices stay­ing firm for much of 2011, high­er in­flows of en­er­gy com­pa­nies-sourced for­eign cur­ren­cy en­abled au­tho­rised deal­ers to meet the pub­lic's in­creased de­mand for for­eign ex­change. In 2011, US4.7 bil­lion was pur­chased from the pub­lic, 17.6 per cent high­er than in 2010. Last year en­er­gy com­pa­nies ac­count­ed for an es­ti­mat­ed 77.2 per cent (com­pared with 73.6 per cent in 2010), of to­tal in­flows of for­eign cur­ren­cy in the lo­cal for­eign ex­change mar­ket. For all of 2011, the Cen­tral Bank said it sold US$1.4 bil­lion in the for­eign ex­change mar­ket com­pared with US$1.5 bil­lion in 2010.

Gross do­mes­tic prod­uct

The Cen­tral Bank's quar­ter­ly gross do­mes­tic prod­uct in­dex showed the T&T econ­o­my de­clined year-on-year by 2.6 per cent in the fourth quar­ter of 2011. This was main­ly due to a dra­mat­ic re­duc­tion in en­er­gy sec­tor ac­tiv­i­ty: -7.8 per cent.

"At the same time, ac­tiv­i­ty in the non-en­er­gy sec­tor in­creased by 1.2 per cent, a rate that was in­suf­fi­cient to off­set the slip­page in the en­er­gy sec­tor," the MPR stat­ed.

The de­cline in the en­er­gy sec­tor was due to:

• age­ing oil­fields

• con­tin­ued main­te­nance op­er­a­tions by some en­er­gy com­pa­nies

En­er­gy's ex­plo­ration and pro­duc­tion sub-sec­tor de­clined by 7.2 per cent due main­ly to an 8.0 per cent drop in nat­ur­al gas pro­duc­tion as bpTT un­der­took main­te­nance work.

"Crude oil out­put for the fourth quar­ter re­mained rel­a­tive­ly low, av­er­ag­ing 86,673 bar­rels per day, about the same as the fi­nal quar­ter of 2010 when BHP Bil­li­ton tem­porar­i­ly ceased crude oil pro­duc­tion to in­stall new ca­pac­i­ty," the re­port read.

Nat­ur­al gas: low­er pro­duc­tion con­tributed to a 15.3 per cent (year-on-year) con­trac­tion in the re­fin­ing sub-sec­tor. LNG out­put fell by 16.5 per cent. Nat­ur­al gas liq­uids de­clined by 16.1 per cent. Pe­tro­le­um re­fin­ing was sup­port­ed by a 17.2 per cent rise in crude im­ports as a small­er vol­ume of crude was avail­able to sup­port re­fin­ing ac­tiv­i­ty. Petro­chem­i­cals sub-sec­tor de­clined 10.4 pr cent. Low nat­ur­al gas sup­plies to the Pt Lisas In­dus­tri­al Es­tate af­fect­ed the in­dus­try. Yara Trinidad Ltd was shut down in Oc­to­ber. Am­mo­nia and methanol pro­duc­tion fell by 13.3 per cent and 2.4 per cent, re­spec­tive­ly.

Un­em­ploy­ment

In the third quar­ter of 2011, the un­em­ploy­ment rate was at 5.2 per cent, ac­cord­ing to the Cen­tral Sta­tis­ti­cal Of­fice. This was a de­cline from 5.8 per cent in the pre­vi­ou­os quar­ter, and 5.9 per cent in the third quar­ter a year ear­li­er. "Notwith­stand­ing the de­cline in the un­em­ploy­ment rate be­tween the third quar­ter of 2010 and the third quar­ter of 2011, the num­ber of per­sons with jobs al­so fell. "The ma­jor­i­ty of job loss­es over the pe­ri­od oc­curred in the 20-24 (4,600 per­sons) and the 40-44 (2,500 per­sons) age groups.

These job loss­es were spread over in:

• man­u­fac­tur­ing (3,200)

• whole­sale and re­tail (2,700)

• and, con­struc­tion (2,500)

"In con­trast, job in­creas­es were re­port­ed in the fi­nance and in­sur­ance (2,700) per­sons) and pe­tro­le­um (2,000 per­sons) sec­tors," the MPR stat­ed.

Re­trench­ment no­tices

The Min­istry of Labour and Small and Mi­cro En­ter­prise De­vel­op­ment not­ed that 186 re­trench­ment no­tices were filed in the first quar­ter of 2012 com­pared to 168 no­tices a year ear­li­er. "The sec­tors that ac­count­ed for the ma­jor­i­ty of no­tices were dis­tri­b­u­tion (43 per cent), trans­port (26.3 per cent) and food pro­cess­ing (22 per cent)."

Labour pro­duc­tiv­i­ty

All in­dus­tries across the board suf­fered a de­cline in labour pro­duc­tiv­i­ty-2.6 per cent year-on-year-in the fourth quar­ter of 2011. "In gen­er­al, the num­ber of hours worked de­clined, es­pe­cial­ly in ac­tiv­i­ties af­fect­ed by the cur­few re­stric­tions," the re­port said, re­fer­ring to the Au­gust-De­cem­ber 2011 state of emer­gency, "but for some busi­ness­es, the drop in out­put was even more pro­nounced. "Pro­duc­tiv­i­ty de­clines were record­ed in food pro­cess­ing (42.8 per cent), petro­chem­i­cals (15.5), and ex­plo­ration and pro­duc­tion of oil and nat­ur­al gas (10.8 per cent). "This lat­ter de­cline re­sult­ed from a sig­nif­i­cant fall in the pro­duc­tion of petro­chem­i­cals (20.2 per cent), and oil and gas. "Ex­clud­ing the oil and gas sec­tor, labour pro­duc­tiv­i­ty rose by 2.8 per cent. This re­flects the fact that hours worked in the non-en­er­gy sec­tors de­clined more steeply (2.9 per cent) than did pro­duc­tion (0.2 per cent," the MPR stat­ed.