GEISHA KOW­LESSAR-ALON­ZO

geisha.kow­lessar@guardian.co.tt

In its out­look for 2024 for T&T, the Cen­tral Bank is pre­dict­ing that eco­nom­ic prospects are mod­est­ly favourable over the short to medi­um term.

This is ac­cord­ing to the Cen­tral bank's An­nu­al Eco­nom­ic Sur­vey 2023 which was re­leased on Tues­day.

It ex­plained that the typ­i­cal­ly stim­u­la­tive role of the en­er­gy sec­tor in the do­mes­tic econ­o­my is an­tic­i­pat­ed to be sub­dued as de­vel­op­ments in in­ter­na­tion­al en­er­gy mar­kets,

such as ris­ing in­ven­to­ry lev­els, and high­er pro­duc­tion from the US, con­tain com­mod­i­ty price in­creas­es.

Al­so, the Cen­tral Bank said lo­cal­ly, the start-up of sev­er­al projects in the en­er­gy sec­tor is sched­uled.

"In the short run how­ev­er, gas sup­plies are like­ly to re­main con­strained, while pro­duc­tion rates at ma­ture hy­dro­car­bon pro­duc­ing wells will con­tin­ue to slip. The non-en­er­gy sec­tor is ex­pect­ed to re­main buoy­ant. This may have fur­ther pos­i­tive im­pli­ca­tions for labour mar­ket con­di­tions, in­clud­ing an in­crease in the labour force par­tic­i­pa­tion rate as more per­sons are en­cour­aged to en­ter the labour mar­ket," the Bank not­ed.

It added that while in­fla­tion is an­tic­i­pat­ed to re­main low in 2024, the ac­tu­al pace of price move­ments will de­pend large­ly on the ex­tent of any changes in util­i­ty or tax rates, the in­ten­si­ty of any ad­verse weath­er con­di­tions and the sta­bil­i­ty of glob­al com­mod­i­ty prices.

With re­spect to the ex­ter­nal fac­tor, the bank said height­ened geopo­lit­i­cal ten­sions in the Mid­dle East near im­por­tant ship­ping chan­nels and the im­po­si­tion of fur­ther sanc­tions have the ca­pac­i­ty to reignite spikes in com­mod­i­ty prices and freight costs, there­by dis­rupt­ing the glob­al dis­in­fla­tion path.

These dy­nam­ics have the po­ten­tial to spill over to do­mes­tic prices, the Cen­tral Bank warned.

Re­gard­ing the do­mes­tic eco­nom­ic ac­tiv­i­ty, the bank said this con­tin­ued to dis­play signs of re­cov­ery in 2023, cit­ing that ac­cord­ing to da­ta from the CSO, GDP at con­stant prices (re­al GDP) ex­pand­ed by 2.5 per cent (year-on-year) in the first half of 2023.

Fur­ther, the Cen­tral Bank stat­ed that growth was pre­dom­i­nant­ly dri­ven by an ex­pan­sion in the non-en­er­gy sec­tor (4.2 per cent), which out­weighed a con­trac­tion in out­put from the en­er­gy sec­tor (-1.3 per cent).

Ac­tiv­i­ty in the non-en­er­gy sec­tor was buffered by growth in sev­er­al sub-sec­tors, name­ly trade and re­pairs; trans­porta­tion and stor­age; and ac­com­mo­da­tion and food ser­vices.

As it re­lates to labour pro­duc­tiv­i­ty, the bank said this im­proved in 2023, re­flect­ing high­er lev­els of do­mes­tic pro­duc­tion cou­pled with slight in­creas­es in ‘man-hours’ worked.

"Ex­clud­ing the en­er­gy sec­tor, the in­dex of pro­duc­tiv­i­ty in­creased by 83.5 per cent in 2023, pri­mar­i­ly due to el­e­vat­ed lev­els of pro­duc­tion (83.7 per cent) along­side a mar­gin­al in­crease (0.2 per cent) in the in­dex of hours worked," said the Cen­tral Bank.