As we wind down to­wards the end of 2011, there are many peo­ple who are re­flect­ing on the state of the econ­o­my this year, even as they make or fine­tune their plans for next year. For­tu­nate­ly for Trinidad and To­ba­go, among the peo­ple do­ing some re­flec­tion and some eco­nom­ic fore­sight­ing is the Gov­er­nor of the Cen­tral Bank, Ewart Williams, who has proven to be a steady, re­li­able and in­de­pen­dent source of in­for­ma­tion, ad­vice and in­sight on most as­pects of the lo­cal econ­o­my. Speak­ing on the top­ic "The cur­rent state of the econ­o­my and the out­look for 2012," Gov­er­nor Williams con­firmed what most peo­ple know or can sense when he said that the pro­jec­tions of the Cen­tral Sta­tis­ti­cal Of­fice (CSO) point to a 1.4 per cent de­cline in the T&T econ­o­my in 2011, which would mean a third year of de­cline or stag­na­tion.

Ac­cord­ing to the Gov­er­nor, the de­cline in the econ­o­my is fi­nal­ly be­gin­ning to take a toll on the em­ploy­ment sit­u­a­tion and while the CSO is yet to pub­lish un­em­ploy­ment da­ta for 2011-and we are in the twelfth and fi­nal month of the year-the Cen­tral Bank's track­ing of re­trench­ment no­tices from the Min­istry of Labour in­di­cates that in the third quar­ter of 2011 these no­tices "were more than dou­ble the amount filed in the cor­re­spond­ing pe­ri­od of 2010, due, in large part, to the clo­sure of one food pro­cess­ing com­pa­ny." This means that the un­em­ploy­ment rate is al­most cer­tain to be sig­nif­i­cant­ly high­er than the 6.3 per cent mea­sured by the CSO in the fourth quar­ter of 2010.

In terms of the eco­nom­ic stew­ard­ship of T&T in­to the New Year, there were some hints in the Gov­er­nor's speech of a se­ri­ous con­cern that the oc­cu­pants of both tow­ers of the Fi­nan­cial Com­plex in down­town Port-of-Spain must har­bour. Mr Williams said: "Re­flect­ing the slug­gish do­mes­tic de­mand, non-en­er­gy im­ports de­clined by 18 per cent in the Jan­u­ary to June pe­ri­od. In­ter­est­ing­ly enough, notwith­stand­ing the de­cline in im­ports, there was a 12 per cent in­crease in for­eign ex­change sales to the pub­lic in the first ten months of 2011 (com­pared with the cor­re­spond­ing pe­ri­od of last year). Over this pe­ri­od, the Cen­tral Bank sold US$1.3 bil­lion, some 15 per cent more than in 2010." Un­for­tu­nate­ly, the Gov­er­nor chose not to re­flect too much on the im­por­tance of sta­tis­tics which point to a de­cline in im­ports at the same time that there is an in­crease in the de­mand for for­eign cur­ren­cy.

If the de­mand for for­eign ex­change is in­creas­ing par­al­lel with a de­cline in im­ports that use for­eign ex­change, the most ob­vi­ous an­swer is that there are peo­ple who are ex­press­ing their views about the state of the econ­o­my by their pref­er­ence for hold­ing for­eign cur­ren­cies rather than the lo­cal cur­ren­cy. While this may be the most ob­vi­ous ex­pla­na­tion, it is not the on­ly one. It is much eas­i­er for a Cen­tral Bank to keep track of every US dol­lar, pound ster­ling or eu­ro sold at com­mer­cial banks and at non-bank fi­nan­cial in­sti­tu­tions than it is to keep track of the trad­ing in goods and ser­vices that goes on con­stant­ly in a small, open econ­o­my with no black mar­ket, few re­stric­tions on ac­cess to for­eign cur­ren­cy and with lib­er­al use of cred­it cards, In­ter­net shop­ping and US-based sky­box­es.

As a re­sult of the in­creas­ing glob­al­i­sa­tion of the T&T pop­u­la­tion in the last two decades, there is al­so the thriv­ing im­por­ta­tion of bar­rels con­tain­ing new or bare­ly used goods bought in the US or Cana­da and the use of mon­ey trans­fer agen­cies to ei­ther send or re­ceive for­eign cur­ren­cies. All of the ex­changes out­lined above are le­gal, but it is clear that there are many as­pects of il­le­gal com­merce that make use of for­eign cur­ren­cies, both as a means of pur­chas­ing il­le­gal goods and as a method of clean­ing ill-got­ten gains. There may be a great deal hap­pen­ing in the lo­cal econ­o­my that is not turn­ing up in the of­fi­cial sta­tis­tics or that takes a very long time to do so. If the Gov­er­nor is con­cerned about the dis­par­i­ty in the lev­el of im­ports and the de­mand for for­eign ex­change, this would seem like an in­ter­est­ing re­search top­ic for the Cen­tral Banks through­out the re­gion.