Mariano Browne
According to the head of the IMF 2023 will be a tough year for many countries as the countries driving world economic growth–the US, Europe and China–will all experience weakening economic activity. “We expect one-third of the world economy to be in recession. Even in countries that are not in recession, it would feel like a recession for hundreds of millions of people,” said the IMF’s managing director Kristalina Georgieva.
This outlook is based on the impact of Central Banks’ monetary policy tightening to slow the high inflation rate in major economies, and the slowdown in China due to the “new” pandemic. The impact of the slow-moving war in Ukraine has also been factored into this outlook. This view is supported by a survey of world economic conditions by McKinsey in December 2022 which identifies five key considerations for 2023 and beyond. First, geopolitical conflicts; second, inflation; third, energy price volatility; fourth, rising interest rates; fifth, changes in trade policy. These considerations indicate that there are multiple headwinds which can impact economic growth. Further policy tightening can be expected to bring down elevated inflation as recently indicated by the Federal Reserve.
Conversely, T&T Prime Minister has said that better days are coming. This positive outlook can only be predicated on continued high prices for natural gas, ammonia and methanol and other energy products. Warmer weather conditions, new natural gas suppliers, conservation practices and alternative energy sources have combined to lower demand thereby slashing natural gas prices in Europe. Reporting on the energy markets for week one of 2023, Oil Price.com noted that “Oil prices experienced the worst start to the year in over three decades this week…,” declining by seven per cent week on week as the outlook for energy prices turned negative because of “US recession fears and China’s troubled reopening.”
The prime minister’s optimism is understandable; politicians sell hope. But the 2015-21 depression has made it abundantly clear why T&T cannot depend solely on the vagaries of international energy prices. Other economic avenues must be identified and developed and whatever constraints hinder or prevent the country from moving in this direction must be addressed. Interestingly, a document on the Ministry of Planning’s website entitled “National Development Strategy 2016-2030 (Vision 2030): An assessment of Trinidad and Tobago’s Progressive and Non-progressive Cultural Factors of Development” provides some clues.
Item 3 of the document identifies factors which affect T&T’s economic behaviour. It notes a culturally pervasive poor work ethic and low productivity. It suggests that entrepreneurship is not supported as evidenced by the number of procedures required to set up a business. It notes that competitiveness is not institutionally strong as the public sector is based on seniority, not a meritocracy. Further, public perception is based on their experiences with public sector service delivery which were borderline positive.
With respect to innovation, it noted that the country does not have culturally strong progressive factors which lead to innovation. Quoting from the National Innovation Policy document it noted that the “challenges of building competitive clusters and upscaling the value chain remain formidable.”
The references suggest that the document was last updated in 2016, seven years ago, validating the first comment in the document. “Although there have been major activities aimed at building a National Monitoring and Evaluation system, its effectiveness has been significantly tempered by issues including a limited human capacity and a fragmented system of data collection, management and reporting.”
A vision statement is meant to achieve transformational change. This requires political will, in the first instance and committed resources to support the programme. It is surprising that after several years of GATE, and the explosion in tertiary enrolment that it occasioned, the effectiveness of the monitoring system was compromised by “a limited human resource capacity.” Indeed, the only way to transform a country is to empower and unleash the latent talent of its citizens. Ultimately, the only true natural resource is adequately trained citizens. What is the progress to date?
To achieve success, goals must be attained. To reach those goals, the vision, policy and action must be aligned to achieve success and that includes IT resources. There will be mistakes, but success requires consistency of purpose and a disciplined approach. It is noteworthy that the Ministry of Legal Affairs’ online registration system is meant to simplify the registration of new companies. Often, the website is either down or unresponsive, making company registrations a difficult task. Also, the available categories listed do not conform to the companies’ business activities.
Achieving better days is not about higher energy prices. Higher energy prices provide only short-term earnings which will be quickly frittered away even if there are expenditure priorities. This is the curse of the lottery winner; a short burst of wealth which is wasted on spending sprees. We have experienced two booms (1974-85, and 1999-2014) without improving our capacity to develop a sustainable economy. Vision 2030s objective is to develop people to build a sustainable economy. Achieving that objective requires a comprehensive approach without which better days will only be a temporary phenomenon. No plan will work unless people work to achieve it.