Senior Reporter
andrea.perez-sobers@guardian.co.tt
Economist Professor Roger Hosein believes Trinidad and Tobago could continue running fiscal deficits until 2040, warning that the country’s economic fragility requires urgent action to expand non-energy exports, improve labour force participation and reduce its dependence on Government spending.
Speaking at yesterday’s Rotary Club of Port-of-Spain West luncheon at the Cascadia Hotel, Hosein argued that the country’s economic challenges reflect years of spending decisions that have altered its productive capacity without generating sufficient foreign exchange or sustainable employment.
“The fiscal balance. We cannot run this country without a fiscal deficit, and I can’t see that reversing until 2040. I can’t,” Hosein declared.
He argued that T&T must move away from an economic structure heavily dependent on transfers and subsidies and place greater emphasis on sectors capable of earning foreign exchange.
Hosein estimated that transfers and subsidies now account for about 53 per cent of total government expenditure, arguing that the expansion of these payments had contributed to changes in production and employment patterns.
He also pointed to a decline in labour force participation, from about 63 per cent in 2003 to approximately 55 per cent currently, describing the trend as a warning sign that the headline unemployment rate does not fully capture the difficulties facing the labour market.
“You have to look at the labour force participation rate in conjunction with the unemployment rate,” Hosein outlined.
He cautioned that people who lose their jobs may leave the labour force altogether, becoming economically inactive rather than being reflected in the unemployment figures.
Hosein estimated that more than 400,000 people were outside the labour force, with the inactive population approaching 500,000 in some of the figures he discussed. He argued that this placed additional pressure on the productive capacity of an economy with a population of approaching 1.5 million.
He also raised concerns about the growth of informal, own-account employment, including people selling produce and bottled water along roadsides. While acknowledging that such activities provide income, he argued that they do not necessarily offer the security, benefits or long-term earning potential associated with sustainable employment.
For Hosein, a major opportunity to change the country’s economic trajectory lies in the Ministry of Trade’s target of generating an additional US$5 billion in non-energy export revenue by 2030.
He described achieving that target as potentially the most significant economic transformation since 1956, pointing to the potential to increase non-energy export earnings from approximately US$3 billion to US$8 billion.
“My personal view and my speciality is trade,” Hosein said, urging the country to support the initiative and remove obstacles that could prevent the target from being achieved.
He said the Ministry of Trade should be given a more central role in economic policy, with other ministries working towards the export expansion target.
Hosein also identified tourism and manufacturing as major opportunities for diversification, describing tourism as a readily accessible source of foreign exchange that has not been fully exploited.
He highlighted the gap between T&T and other Caribbean destinations in attracting overnight visitors and cruise passengers, arguing that greater attention should be paid to expanding overnight tourism because visitors staying longer generally contribute more to the economy.
Hosein outlined a potential tourism strategy that would increase overnight arrivals from approximately 400,000 in 2025 to between 2.5 million and three million by 2030.
He also discussed the possibility of generating US$4 billion in tourism revenue by 2035 as the country prepares for declining energy revenues over the longer term.
He cautioned, however, that increased gas production would not automatically return the economy to the boom conditions experienced between 2008 and 2015.
Using projections discussed during his presentation, Hosein estimated that average gas production could reach approximately 3.2 billion standard cubic feet per day between 2029 and 2033.
“We are going to get a rise, not a boom,” he warned, arguing that higher production would provide some improvement but would not resolve the country’s underlying economic problems.
Hosein urged civil society and business organisations to monitor the Government’s progress in expanding exports and earning foreign exchange, insisting that diversification must be supported by measurable targets and consistent public scrutiny.
