Senior Reporter
geisha.kowlessar@guardian.co.tt
T&T’s economic challenges are increasingly showing up in grocery carts and supermarket aisles, where consumers are buying smaller quantities and carefully managing every dollar spent, says commentator Mariano Browne.
Speaking on CNC3’s The Morning Brew Programme yesterday, Browne noted retailers are reporting declining purchase volumes, a sign that many households are under pressure even as inflation remains relatively contained and major energy projects remain years away from delivering their full benefits.
“What I do know, anecdotally from discussing with the retailers, or speaking to retailers, is that the volume of purchases at supermarkets is down,” Browne explained.
Asked whether this was a clear indication of the country’s economic state, Browne said, “You can look at smaller supermarkets and what you’ll find is that when things get hard, the product sizes change.
“For example, you will find them in smaller amounts. So instead of selling a five-pound container, you’ll probably sell a one-pound container or a half-pound container to the extent to which you have control over some of those prices also with regard to basics.”
Pointing to Jamaica as an example, Browne said consumers in tighter economic circumstances often buy only what they need for the immediate term rather than making larger purchases.
“They might not buy a dozen eggs, but they might buy one or two. Depending upon what happens. Now that’s the reality when things are tight.
“And that’s what the supermarkets tell you. That their portion sizes have to be repackaged because people are managing their spend,” he said.
Browne linked those realities to deeper structural issues within the economy, particularly T&T’s dependence on the energy sector and the continuing shortage of foreign exchange.
He said the key indicators used to assess economic performance, including gross domestic product, unemployment, inflation and foreign exchange reserves, all remain heavily influenced by the performance of a single industry (energy).
“Generally speaking, when you look at the economy, at the growth of GDP, at your unemployment, at inflation, and the foreign exchange reserves are the key factors.
“And all of those things are buoyed up in terms of one variable or two variables, perhaps. The first point is that the majority, 80 per cent of our foreign exchange reserves come from one sector. The reason why the economy is slow is because the dynamo of the economy is slow,” Browne stated.
While successive governments have spoken about diversification, Browne said the country remains vulnerable to fluctuations in energy production and exports.
At the same time, he said inflation has remained surprisingly low despite global economic uncertainty and price pressures affecting many countries. However, he warned that the relatively favourable inflation figures could change because much of T&T’s inflation is imported.
“The inflation numbers look good, surprisingly, given what is taking place in the rest of the world. But the question is, will it stay there?” Browne asked.
He also argued that policymakers have limited control over inflationary pressures because much of the country’s inflation is effectively imported saying, “You have very little control over that because all inflation is largely imported. So the price of goods, most of what we need, the coefficient is somewhere around 80 per cent of every dollar that is spent in Trinidad and Tobago, basically goes outside in the sense of it has a foreign exchange component. So it means that by definition, 80 per cent of any product or item which is produced in Trinidad and Tobago has that component too, with the exception of natural gas.”
While there is optimism surrounding future energy developments, Browne urged caution against expectations of a rapid turnaround. He noted that many people are placing significant hope in future gas supplies from Venezuela and major projects such as Manatee, but said those expectations may be unrealistic.
“The Government is in a very difficult position. Everybody is thinking that it will get Venezuela gas. Manatee will come on stream in 2027 and next year is going to be a bumper year,” Browne said as he warned, “It’s going to be very slow. The one project that may come on stream is Ginger. Manatee is moving towards it. At the same token, all of those projects are heavily capital projects,” Browne said, adding that Manatee, which is expected to produce about 600 million cubic feet a day at peak, is not going to start off at that rate.
