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T&T’s third quarter GDP falls
T&T’s third quarter gross domestic product (GDP) fell by 0.5 per cent year-on-year, according to latest data from the Central Bank of T&T. Central Bank Governor Jwala Rambarran had given the figure as “preliminary” in Debe on December 18 at the National Energy Skills Centre.
Energy GDP fell by 4.1 per cent, the lowest since the second quarter of 2012, when it had fallen by 7.3 per cent year-on-year. Petrochemicals GDP continued its downward slope, falling in 3Q 2013 by 8 per cent year-on-year. However, the fall was not as hard as the 9.3 per cent decline of the previous quarter.
As Rambarran had forecast, non-energy GDP grew by 1.9 per cent in third quarter 2013 year-on-year, but this was the smallest growth for non-energy for the year. In the first quarter of 2013, non-energy GDP grew by 3.6 per cent, and in the second quarter by 2.6 per cent. The construction sector showed the strongest growth in the quarter, growing by 3 per cent year-on-year. However, that too was down from the previous quarter when it was 3.5 per cent.
Manufacturing remained stagnant at 0.0 per cent, down from 4.6 per cent in the second quarter of 2013. Distribution grew by 1.1 per cent year-on-year, down from 1.7 per cent during the previous quarter. Agriculture grew by 1.9 per cent in third quarter 2013 year-on-year, down from 2 per cent the previous quarter.
At the NESC in Debe, while opening the CBTT’s Inaugural Monetary Policy Forum on December 18, Central Bank Governor Rambarran released the numbers, but he started with a nine month versus nine month comparison. “Our preliminary estimates suggest that the T&T economy grew by 1.3 per cent in the first nine months of 2013, compared with a contraction of 0.3 per cent in the first nine months of 2012,” he said.
Rambarran said that “ongoing large scale maintenance and safety upgrades at energy companies posed a considerable drag on the (economic) recovery process throughout 2013, especially in the third quarter (3Q) when the energy sector underwent the largest co-ordinated maintenance effort to date.”
“The subsequent sharp shortfall in natural gas production—while anticipated—adversely affected both refining activity and output of petrochemicals, generating a decline of 4 per cent in energy output, and an estimated contraction of 0.5 per cent in real GDP.”
“Intervention by the Ministry of Energy and Energy Affairs was critical to the maintenance work that involved bpTT and BG, taking the bpTT Cassia B hub and BG Dolphin facilities offline. These turnarounds were co-ordinated with Atlantic LNG’s Train 3 and nine major plants at the Point Lisas Industrial Estate.”
Rambarran said “were it not for the planning and coordination of these maintenance events, we estimate that the contraction in energy output would have been severe enough to halt the recovery underway and push the economy back into negative growth territory for all of 2013.”
Non-energy sector grows
On the other hand, the non-energy sector continued its slow but steady pace of revival, providing support to the overall economy but still not enough to fully offset the drag posed by maintenance activities in the energy sector. “In fact, the non-energy sector has registered growth for the past ten quarters to September 2013, supported by the finance, construction and distribution sectors,” he said. Growth in the finance sector was driven mainly by an expansion of commercial bank deposits and loans, he said.
“The increase in construction activity was likely related to several public sector projects including highway construction and housing, and perhaps to a lesser extent some private sector projects. Local sales of cement—a key indicator of construction activity—were up by 12.5 per cent (on a year-on-year basis) in the 3Q 2013,” Rambarran said.
“The performance of the distribution sector reflected increased retail sales in several industries, including dry goods, supermarkets and groceries and motor vehicles. Regarding the latter, sales of new motor vehicles have been running at double digit rates into the third quarter of 2013. The PDA motor vehicle series was ended within a record three months.” In the face of still weak private demand, the government budget has served as the main stimulus to economic activity over the past few years, Rambarran said.
“Given the country’s strong foreign exchange reserves and low public debt to GDP ratio, I believe that the government has enough fiscal space to run temporary budget deficits. In fact, since 2010 the central government has realised moderate fiscal deficits not exceeding 3 per cent of GDP. Nevertheless, it is important for the government to respect its own plan for moving to fiscal balance over the medium term, and to accelerate these plans, once conditions permit,” he said.
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