Economic growth in the medium term looks weak for T&T’s economy, says former governor of the Central Bank Ewart Williams.“There are reports of renewed interest in oil and gas exploration. If successful, this could mean increased production five or six years down the road. Even on this optimistic scenario, there could be future years of trepid economic growth. Projections contained in the budget for growth next year is at two per cent. I would call that trepid,” he said.
Williams was speaking yesterday at the Conference on the Economy hosted by the Department of Economics, University of the West Indies (UWI), St Augustine. Williams does not expect a bright future for the energy sector.
“Assuming domestic supplies uncertainties, our energy sector outlook may not be particularly bright. Some experts argue that given the costs of deepwater exploration, exceptionally high oil prices may be needed to make any oil discoveries commercially profitable. “Secondly, the rapid expansion of shale gas production taking place could significantly reduce demand for our gas and our petrochemical sector and would drive prices way below current levels,” he said.
The current conditions demand that T&T and other Caribbean economies speed up economic reforms, he said. “These scenarios make economic transformation all the more urgent if we are to insulate our economy from boom-and-bust prices in the future, if we are to raise our current growth rate and if we are to achieve long-term stability,” he said.
Williams said one lesson to be learnt from T&T’s economic history is having the right fiscal balance that contributes to development. “Inappropriate fiscal policies have contributed significantly to the under developed state of our non-energy sector. The first fatality of our fiscal policy has encouraged overheating in the boom, leading to inflationary pressures and the appreciation of the exchange rate. “Our fiscal policy has not found the right balance between social objectives, as reflected in allocations to subsidies and transfers, and a development of our economic infrastructure,” he said.