The Economic Bulletin July 2011, which was presented yesterday at a news conference by the Governor of the Central Bank, Ewart Williams, provides a useful, and in some parts surprising, snapshot of the T&T economy at a time of almost unprecedented global financial instability.
The first surprise is that the data seem to indicate that the local economy could well be in a full-fledged recession.
While some in the Government have described the economy as being stable, the evidence from the Central Bank indicates that "on a year-on-year basis, the Trinidad and Tobago economy registered negative growth of 1.7 per cent following a contraction of 3.6 per cent in the fourth quarter of 2010."
If the definition of that economic phenomena as being consecutive quarters of negative economic growth is accepted, then the local T&T economy may actually now be in reverse.
T&T may well have beat the United States and other major economies in reporting a double-dip recession-the quite recent term used by economists to refer to a recession, followed by a short-lived recovery, followed by another recession.
Quite surprisingly, the bulletin also suggests that while the economy may have stalled, the country's fiscal accounts were in positive territory for the first nine months of the fiscal year-that is the period October 2010 to June 2011.
According to the Economic Bulletin: "Provisional data provided by the Ministry of Finance suggest that the central government recorded a surplus of $1.227 billion for the first nine months of the fiscal year. Elevated oil and petrochemical prices coupled with collections from the tax amnesty resulted in a year-on-year increase in government revenue of 8.4 per cent."
According to the Ministry of Finance's own numbers, the bulletin revealed that Government's spending remained lower than anticipated, particularly with respect to the capital programme. Total expenditure amounted to $32.843.4 billion during the period October 2010 to June 2011, which was 10 per cent lower than the budgeted spending level.
While Government's spending was lower than expected, T&T's total revenue grew by 8.4 per cent above the same period one year earlier. The country collected $34.070 billion in revenue for the October 2010 to June 2011 period, which was $2.636 billion more than collections for the period October 2009 to June 2010.
"The gains in revenue can be partly attributed to a higher average crude oil price, which increased to US$93.85 per barrel (WTI) in the period under review from US$79.69 per barrel a year earlier, which offset the impact of a decline in oil production," according to the bulletin.
Higher prices for T&T's main exports led to a continuation in the build-up of the country's foreign reserves, with gross official reserves estimated at US$9,736.5 million at the end of June, which was equivalent to 13.1 months of import cover. In addition to the foreign reserves, T&T saved US$3.759 billion in the Heritage and Stabilisation Fund by the end of March 2011.
The recent volatility in the global financial markets means that T&T's relatively comfortable fiscal and foreign reserve positions cannot be taken for granted.
In a few days of trading on the oil market, the benchmark West Texas Intermediate crude fell from around US$95 a barrel to settle yesterday at US$81.31 a barrel.
Given the link that the Central Bank made between higher revenues and the higher price of oil, the fact that oil prices have fallen in the wake of the downgrade of the US and the collapse of the US stock markets must be of concern to policymakers.