Rapheal John-Lall

T&T's gross do­mes­tic prod­uct (GDP) has de­clined by an es­ti­mat­ed 6.7 per cent in the first half of the year, Dr. San­dra Sookram, Deputy Gov­er­nor, Mon­e­tary Op­er­a­tions at the Cen­tral Bank said yes­ter­day.

Like most en­er­gy ex­port­ing coun­tries, T&T's weak eco­nom­ic per­for­mance in 2015 and mid 2016 has stemmed large­ly from the en­er­gy sec­tor. In ad­di­tion to the im­pact of the de­clin­ing rates of ex­trac­tion on the oil and gas fields, en­er­gy sec­tor out­put was cur­tailed on ac­count of the tem­po­rary sus­pen­sion of op­er­a­tions at two ma­jor oil com­pa­nies," she said.

"In­di­ca­tors in the con­struc­tion sec­tor, such as sales of ce­ment, ready mix con­crete, all de­clined. This can be linked to the slow­down of the ex­e­cu­tion of the Gov­ern­ment's cap­i­tal pro­gramme."

Da­ta on the state of the T&T econ­o­my was re­leased yes­ter­day at the launch of the lat­est mon­e­tary pol­i­cy re­port from the Cen­tral Bank. The re­port shows head­line in­fla­tion at 3 per cent in Sep­tem­ber 2016, along with a 12.6 per cent de­cline in the en­er­gy sec­tor in the sec­ond quar­ter of the year. The non en­er­gy sec­tor de­creased by 5.4 per cent for the same pe­ri­od.

The In­dex of Re­tail Sales de­clined by 1.6 per­cent in the sec­ond quar­ter part­ly as a re­sult of a sharp fall off in the con­struc­tion ma­te­ri­als and hard­ware sub­sec­tor.

Cen­tral Bank Gov­er­nor Dr. Alvin Hi­laire said the eco­nom­ic chal­lenges fac­ing the coun­try should not mere­ly be looked at as a tem­po­rary phe­nom­e­non as there is the long term need to re-en­gi­neer. He said the coun­try is in the ear­ly stages of an eco­nom­ic ad­just­ment pro­gramme.

"Re-en­gi­neer­ing would re­quire a ma­jor long term ef­fort. Every­one needs to be part of it. There needs to be a con­cert­ed ef­fort to im­prove the rev­enue sources and to get away from the re­liance on en­er­gy. The way of do­ing busi­ness and the ef­fi­cien­cy of the econ­o­my needs to be shored up. As the gov­ern­ment needs to roll back its ac­tiv­i­ties, the pri­vate sec­tor needs to take a greater role," he said.

Hi­laire said he does not ex­pect to see en­er­gy prices ris­ing in the medi­um term.

"Prices are ex­pect­ed to re­main fair­ly flat. Opec projects that by 2020 its ref­er­ence bas­ket will be at US$60 a bar­rel," he said.

On the is­sue of a for­eign cur­ren­cu short­age, Hil­iare said this is al­so a symp­tom of the short­fall of rev­enue from the drop in oil prices. He ex­pects the sit­u­a­tion to wors­en in the short term.

"We do rec­og­nize that there is an im­bal­ance in the for­eign ex­change mar­ket. In the short run we may have some wors­en­ing of the sit­u­a­tion based on the sea­son de­mand like Christ­mas. We be­lieve over the first half of 2017 things should set­tle and the sit­u­a­tion in the for­eign ex­change mar­ket could be al­le­vi­at­ed," he said.

De­spitethe eco­nom­ic chal­lenges that the coun­try faces, Hi­laire said that all is not lost and T&T still has many pos­i­tive as­pects from which to build a dif­fer­ent type of econ­o­my. He said the coun­try has one year of im­port cov­er, strong Her­itage and Sta­bil­i­sa­tion Fund (HSF) re­serves and a skilled and ed­u­cat­ed work­force.