An­tho­ny Wil­son

In a state­ment last week, Fi­nance Min­is­ter Lar­ry Howai ex­pressed the view that the lo­cal econ­o­my could record growth of 2 per cent for the first half of 2013 if the im­prove­ment in the en­er­gy sec­tor con­tin­ues.

"Based on the da­ta which we have re­ceived from the Cen­tral Bank and the con­sul­ta­tive mid-year re­views held with a broad group of stake­hold­ers, and notwith­stand­ing some un­avoid­able set­backs in the en­er­gy sec­tor, the Trinidad & To­ba­go econ­o­my is like­ly to see growth of up to 2 per­cent for the first half of 2013."

"With the vary­ing im­pact of these fac­tors, growth of 0.5 per cent was record­ed for the en­er­gy sec­tor as a whole in the quar­ter end­ed March 2013 which was an uptick from the 0.0 per cent for the quar­ter end­ed De­cem­ber 2012. Stronger growth was record­ed in ex­plo­ration and pro­duc­tion which grew by 1.6 per cent; nat­ur­al gas pro­duc­tion which in­creased by 2.0 per cent, and liq­ue­fied nat­ur­al gas (LNG) out­put which in­creased by 5.4 per cent," Howai said. In the petro-chem­i­cal sub-sec­tor, there were mod­er­ate in­creas­es of 3.1 per­cent in Urea pro­duc­tion and 1.4 per­cent in methanol pro­duc­tion.

The Min­is­ter al­so dis­closed pos­i­tive news for the non-en­er­gy sec­tor, say­ing that based on the in­di­ca­tors avail­able, the Cen­tral Bank has pro­vid­ed flash es­ti­mates of growth for the non-en­er­gy sec­tor of be­tween 2.6 to 2.9 per cent in the first quar­ter of 2013.

"We are ad­vised that the Fi­nance, In­sur­ance and Re­al Es­tate sec­tor is an­tic­i­pat­ed to have grown by 6.0 per cent, as there are ear­ly signs of high­er ac­tiv­i­ty in the com­mer­cial bank and re­al es­tate sub-in­dus­tries.

"In­di­ca­tors al­so re­vealed in­creased ac­tiv­i­ty in the con­struc­tion sec­tor (3.0 per cent). Lo­cal ce­ment sales, which re­bound­ed from in­dus­tri­al ac­tion at TCL in the first half of 2012, in­creased by 51.7 per cent in the first quar­ter of 2013 (com­pared with the same pe­ri­od in 2012), while pro­duc­tion of mined ag­gre­gates is es­ti­mat­ed to have in­creased by 30.0 per cent."

Ac­cord­ing to Mr Howai: "The sales of new mo­tor ve­hi­cles in­creased by 13.3 per cent in the first quar­ter of 2013," adding that strong signs of growth have al­so shown up in the man­u­fac­tur­ing sec­tor boost­ed by the rise in the pro­duc­tion of ce­ment."

"Giv­en these pos­i­tive sig­nals, and based on the da­ta we have, we have been ad­vised that the non-en­er­gy sec­tor is es­ti­mat­ed to have grown be­tween 2.6 and 2.9 per cent in the first quar­ter of 2013. For the sec­ond quar­ter, pre­lim­i­nary ev­i­dence points to con­tin­ued growth, more so in the Fi­nance, In­sur­ance and Re­al Es­tate and Con­struc­tion sec­tors. The flash es­ti­mates pro­vid­ed by the Cen­tral Bank al­so es­ti­mates that the non-en­er­gy sec­tor will grow at a rate some­where be­tween 2.5 and 2.8 per cent in the sec­ond quar­ter.

"We must al­so bear in mind that the over­all growth in the econ­o­my, is oc­cur­ring in an en­vi­ron­ment of well con­tained in­fla­tion­ary pres­sures and un­em­ploy­ment which re­cent da­ta put at just over 5 per cent, the low­est lev­el in the re­gion."

It would be fair to say that there has been a great deal of skep­ti­cism in busi­ness and eco­nom­ic cir­cles about what is be­ing view as an at­tempt by the Fi­nance Min­is­ter to talk up the econ­o­my.

There seems to be a gen­er­al con­sen­sus that Mr Howai may be the on­ly in­di­vid­ual who has such a bright eco­nom­ic out­look for T&T at this point in time.

This skep­ti­cism (which some may view as cyn­i­cism) is due to the fact that peo­ple re­mem­ber hear­ing the for­mer Min­is­ter of Fi­nance, Win­ston Dook­er­an, say­ing that he was see­ing "green shoots" and "blue skies" in T&T in 2011, as he looked for metaphors to de­scribe the econ­o­my spring­ing back to life.

Those who con­clud­ed that Mr Dook­er­an may have suf­fered from eco­nom­ic colour blind­ness would have found sup­port from the Cen­tral Bank's as­sess­ment of the T&T econ­o­my.

The Cen­tral Bank's Mon­e­tary Pol­i­cy Re­port for April 2013 (as at June 3) states that the do­mes­tic econ­o­my de­clined by just over 2.5 per cent in 2011, and that growth in 2012 was es­ti­mat­ed to be a very weak 0.2 per cent. This ba­si­cal­ly means the econ­o­my was flat last year.

Like Doubt­ing Thomas, many in this coun­try will have to place their hands in the wound of the econ­o­my be­fore they will be­lieve that it is grow­ing.

The fact that the T&T econ­o­my has been in de­cline mode since the third quar­ter of 2008 is al­so con­tribut­ing to the skep­ti­cism that has greet­ed the Fi­nance Min­is­ter's pos­i­tive analy­sis of the da­ta and ev­i­dence.

In the four-and-a-half years since the econ­o­my tanked, many peo­ple have be­come so ac­cus­tomed to liv­ing in a coun­try that al­ter­nates be­tween eco­nom­ic de­cline and stag­na­tion that they have ad­just­ed their hori­zons to this new "re­al­i­ty."

Giv­en the de­cline in oil pro­duc­tion that be­gan in 1979 and the in­creas­ing­ly bleak an­nu­al nat­ur­al gas au­dits con­duct­ed by Gaffney, Cline, there is a per­cep­tion that the coun­try's days of eco­nom­ic growth are be­hind it.

I do not share that pes­simism.

At mid-2013, there are three fac­tors that are hold­ing back the econ­o­my: the main­te­nance work that bpTT and British Gas are ex­pect­ed to con­clude in the fourth quar­ter of this year; the un­cer­tain­ty over the con­clu­sion of the CL Fi­nan­cial ne­go­ti­a­tions and the fact that the Gov­ern­ment was on­ly able to spend 60 per cent of the cap­i­tal bud­get for the first six months of the year.

Ac­cord­ing to the Mon­e­tary Pol­i­cy Re­view, for the pe­ri­od Oc­to­ber 2012 to March 2013, the bud­get for cap­i­tal ex­pen­di­ture was $4.082 bil­lion, while the ac­tu­al ex­pen­di­ture for that pe­ri­od was $2.485 bil­lion–a short­fall of $1.6 bil­lion.

The MPR states: "Cap­i­tal spend­ing � the main thrust of the gov­ern­ment's in­vest­ment pro­gramme to spur eco­nom­ic growth � was al­most 7 per cent low­er than the cor­re­spond­ing pe­ri­od in FY 2012. The short­fall in cap­i­tal spend­ing was main­ly due to ad­min­is­tra­tive de­lays, out­stand­ing sub­mis­sion of in­voic­es for pay­ment and de­lays in the im­ple­men­ta­tion of sev­er­al projects."

This sce­nario of ad­min­is­tra­tive de­lays, of course, has the po­ten­tial to cause a sit­u­a­tion in which all the projects that have been held back for what­ev­er rea­son get ap­proved and start at the same time. This may cause a re­turn to the pe­ri­od five years ago when pri­vate con­trac­tors had to beg for ce­ment and hired guards to pre­vent poach­ing of work­ers from their job sites.

My re­al con­cern is not that the econ­o­my will con­tin­ue to stag­nate in 2014, but that things may be­come so heat­ed that the Cen­tral Bank is forced to in­crease the cost of mon­ey sharply to cool things down.

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