​Raphael John-Lall

raphaeljohn­lall@hot­mail.com

Prof of Eco­nom­ics at the Uni­ver­si­ty of the West In­dies (UWI), St Au­gus­tine, Dr Roger Ho­sein has praised the ex­pan­sion of the coun­try’s man­u­fac­tur­ing sec­tor, but added that oth­er in­dus­tries must al­so be ad­dressed by the Gov­ern­ment to dri­ve the growth of the do­mes­tic econ­o­my.

Ac­cord­ing to in­for­ma­tion Ho­sein pro­vid­ed to the Busi­ness Guardian, pri­or to 2022 and in par­tic­u­lar for the pe­ri­od 2009 to 2021, the av­er­age an­nu­al eco­nom­ic growth in T&T was -0.9 per cent.

“Crit­i­cal­ly though the T&T econ­o­my has seen some im­prove­ments since 2017 in its man­u­fac­tur­ing sec­tor. In par­tic­u­lar, man­u­fac­tur­ing eco­nom­ic ac­tiv­i­ty (this is nar­row man­u­fac­tur­ing i.e. we have ex­clud­ed the man­u­fac­ture of pe­tro­le­um and chem­i­cal prod­ucts) in­creased by 43.8 per cent be­tween 2017 and 2023, in re­al terms. This is a fan­tas­tic achieve­ment dri­ven sub­stan­tive­ly by the food, drink and to­bac­co sec­tor.”

He al­so re­ferred to oth­er sec­tors of the econ­o­my for which he be­lieves pol­i­cy­mak­ers must come up with so­lu­tions.

Ho­sein said that it is well known that the pro­duc­tion of nat­ur­al gas is on the de­cline in T&T and the bor­der con­flict be­tween Venezuela and Guyana can be po­ten­tial­ly dis­rup­tive to some of the ex­pect­ed fu­ture flows of aligned gas.

He added that it is very im­por­tant to plan ahead and one po­ten­tial­ly gold­en op­por­tu­ni­ty that ex­ists for T&T’s econ­o­my is in wind en­er­gy.

He re­ferred to an im­por­tant study ti­tled The Roadmap for a Green Hy­dro­gen Econ­o­my in T&T, pub­lished in No­vem­ber 2022, in which the pos­si­ble fu­ture of the green hy­dro­gen econ­o­my in T&T is out­lined.

“Draw­ing from this doc­u­ment, if the T&T econ­o­my can put the steps in place so that by 2040 the T&T econ­o­my can have on stream 5 Gi­gawatts (GW) of wind en­er­gy of which two GW would be on­shore and 3GW off­shore, then that can be a tremen­dous game chang­er for the T&T econ­o­my and set the path to long-term sus­tain­able op­tions. To be clear, the cur­rent pro­duc­tion of nat­ur­al gas fell from 4,329 mil­lion cu­bic feet per day (mm­cf/d) in 2010 and for 2023 so far av­er­aged 2,592 mm­cf/d. Fur­ther, by 2025 the Min­istry of Fi­nance in the Bud­get Speech 2024 not­ed it would be at about 2500 mm­cf/d, which is ap­prox­i­mate­ly 58 per cent of the 2010 lev­el of pro­duc­tion.”

Ho­sein al­so ad­dressed oth­er sec­tors of the econ­o­my like tourism that has seen a de­cline over the last few years.

“T&T re­ceived 534,000 vis­i­tors in 2006. By 2022 though, ac­cord­ing to da­ta from the World De­vel­op­ment In­di­ca­tors (WDI), this plunged con­sid­er­ably to about 227,000 vis­i­tors. Giv­en that the econ­o­my’s ra­tio of ex­ter­nal debt to in­ter­na­tion­al re­serves is drift­ing close to uni­ty, I think pol­i­cy­mak­ers should set a tar­get eg dou­bling tourism in­flows with­in a five-year pe­ri­od by mak­ing the at­ten­dant changes and putting in the rel­e­vant work. In this way the econ­o­my can ben­e­fit from a greater in­flow of for­eign ex­change.”

He al­so said that re­mit­tances could be an­oth­er way to gen­er­ate for­eign ex­change and he point­ed to a sem­i­nal re­search ti­tled In­vest­ing Back Home: The Po­ten­tial Eco­nom­ic Role of the Caribbean Di­as­po­ra un­der­tak­en by the World Bank in 2016 and an out­line of the mi­grant stock of sev­er­al Caribbean mem­ber states abroad was list­ed.

These states were An­tigua & Bar­bu­da, Bar­ba­dos, Be­lize, Do­mini­ca, Do­mini­can Re­pub­lic, Grena­da, Guyana, Ja­maica, St Kitts & Nevis, St Lu­cia, St Vin­cent & The Grenadines, Suri­name, The Ba­hamas and T&T.

“Us­ing this mi­grant stock, the amount of re­mit­tances per per­son abroad was cal­cu­lat­ed and plot­ted against the Gross Do­mes­tic Prod­uct (GDP) per capi­ta of these same states. What we found was that the amount of mon­ey re­mit­ted per T&T di­as­po­ra mem­ber abroad is con­sid­er­ably low­er than that sug­gest­ed by the ‘line of best fit’. The point here is that some foun­da­tion­al work would like­ly help us get much more re­mit­tances per per­son, oth­er things con­stant. (Note, us­ing our sim­ple rep­re­sen­ta­tion T&T’s re­mit­tances per per­son should have been clos­er to US$1,100 per per­son as com­pared to the US$384 per per­son ap­prox­i­mate­ly, that cur­rent­ly holds).”

Hav­ing a sound ex­change rate is an­oth­er com­po­nent in hav­ing a com­pet­i­tive econ­o­my, he said.

“The Re­al Ef­fec­tive Ex­change Rate (REER) is one of the most pow­er­ful vari­ables in un­der­stand­ing the ex­ter­nal com­pet­i­tive­ness of an econ­o­my. An up­ward move­ment in the val­ue of this vari­able means that the econ­o­my’s ex­ter­nal com­pet­i­tive­ness has fall­en. In the 2022 IMF re­port, the pre­dict­ed trend in our REER was of a down­ward move­ment (see Fig­ure 1). By the time the IMF 2023 re­port came out in March 2023, the REER was re­vised, and the new trend in­di­cat­ed an in­creased val­ue of about 8 per­cent­age points when com­pared with the IMF’s 2022 es­ti­mate made in the ar­ti­cle IV doc­u­ment, re­leased one year ear­li­er (March 2022). The REER is ex­pect­ed to wors­en in 2022 and 2023 giv­en the econ­o­my’s re­alised do­mes­tic in­fla­tion rates in re­la­tion to the in­fla­tion rates of our main trad­ing part­ners.”

Ho­sein al­so rec­om­mend­ed an in­crease in the re­tire­ment age giv­en the coun­try’s age­ing pop­u­la­tion.

“Apart from all of this, us­ing da­ta from https://www.pop­u­la­tion­pyra­mid.net/trinidad-and-to­ba­go, it is clear that there is a wors­en­ing of the pop­u­la­tion struc­ture of the T&T econ­o­my. In 2023, the ra­tio of num­ber of peo­ple old­er than 59 years to the num­ber of per­sons less than 15 years was 0.95. By 2035 this same ra­tio is ex­pect­ed to drift to 1.47. In this re­gard, all ef­forts should be made to in­crease the re­tire­ment age in T&T with­in the medi­um term.”

He en­cour­aged pol­i­cy mak­ers in T&T in to pay more at­ten­tion to the ed­u­ca­tion sec­tor.

“In the ed­u­ca­tion­al sphere the Glob­al Gen­der Gap Re­port (2021) pro­vides da­ta which in­di­cates that in pri­ma­ry schools the ra­tio of fe­males to males is about 1 to 1 but by the time we reach ter­tiary lev­el ed­u­ca­tion, the ra­tio is about 1.27 to 1. Pol­i­cy­mak­ers would have to in­ves­ti­gate why these males drop out of the sys­tem and out­line ways to re­duce the lev­el of male dropouts as they move up the ed­u­ca­tion­al lad­der.”

He al­so ad­dressed the high crime rate, which the busi­ness com­mu­ni­ty has been com­plain­ing about for many years and asked for a deep­er un­der­stand­ing of this com­plex prob­lem.

Ac­cord­ing to his da­ta, there are 486,000 eco­nom­i­cal­ly in­ac­tive per­sons in the coun­try and asked if this is some­how con­nect­ed to the wor­ry­ing crime and mur­der rate.

“From an­oth­er di­men­sion, 2023 is the sixth time in record­ed his­to­ry (Cen­tral Sta­tis­ti­cal Of­fice (CSO)) da­ta for this vari­able was first pro­duced in 1966) that T&T record­ed a mur­der lev­el above 500. The years 2022 and 2023 as it stands, ac­count for 1,147 mur­ders, the high­est back-to-back two years of mur­ders in our record­ed post-in­de­pen­dence his­to­ry. Since 2007 there has been 7,466 mur­ders. For the pe­ri­od 1966-2023 the av­er­age mur­der lev­el has been 211.

“But note that from 1966-2006 the av­er­age an­nu­al mur­der lev­el was 107 as com­pared to an av­er­age an­nu­al mur­der lev­el of 462 be­tween 2007-2023.

“What has caused this surge in mur­ders in T&T—is it the de­cline in the labour force par­tic­i­pa­tion rate (be­tween 2005 and 2023 thus far the cor­re­la­tion be­tween these vari­ables is -0.49)?

He con­clud­ed by re­fer­ring to In­ter­na­tion­al Mon­e­tary Fund (IMF) fore­casts which show a strong GDP growth for the next few years.

“The T&T econ­o­my ben­e­fit­ted from favourable eco­nom­ic growth in 2022 and the IMF has fore­cast pos­i­tive medi­um-term growth for the pe­ri­od 2023-2028. This lit­tle note iden­ti­fies some gaps that ex­ist and which if prop­er­ly closed could help strength­en the coun­try’s de­vel­op­ment sit­u­a­tion.”