While the Central Bank Annual Economic Survey, 2021, shows some improvement in economic activity, economist Dr Roger Hosein says people should not get carried away with the impression that there was major growth.
As a guest on CNC3's The Morning Brew Thursday, Hosein said the economy appeared more buoyant in 2021 because 2020, when the COVID-19 pandemic hit, saw many businesses closing down because of restrictions.
The Survey revealed that during the first three quarters of 2021, labour productivity in the non-energy sector improved by 36.7 per cent, leading to higher production levels and fewer hours worked. But Hosein said the true assessment was to look at 2021 in relation to 2019.
“If you have an economy with 100 stores and you close 40, then that would lead to a reduction in the level of economic activity in the country. And if you move from 60 stores being opened to 75 stores being opened, then the level of production and level of economic activity would rise. So what we want to do is to disentangle them both,” Hosein said.
He said the minor improvements should be an impetus to return the economy to a path of growth at the level it was in 2015. However, as an oil and gas producing economy, dwindling natural gas production continues to restrain growth.
Hosein said natural gas production has to increase to boost outputs of Liquefied Natural Gas (LNG), methanol and ammonia. While there was an increase in production in the last two months, it was certainly lower than the peak in 2010. However, Hosein said it could support the needs of the global economy.
Where T&T benefits greatly are from the increased prices of LNG, ammonia, national gas and oil. Hosein said whether these higher commodity prices would trickle down to the common man would be revealed in the mid-year revenue. He suspects the Government would request an additional $3 billion for expenditure.
“There is a lot of room for improvement, and one of the things that we want to keep our eyes on is the labour market because the latest CSO figure indicates that the unemployment rate in the labour market increased to 5.7 per cent if I remember correctly. That was a 2020 number. Who knows, today it could even be slightly higher.”
Hosein said the Government should keep making economic interventions to keep the unemployment rate down. He said it should not just be about generating employment but developing areas that generate foreign exchange.
While the Russian invasion of Ukraine brought an increase in commodity prices, increasing the amount of foreign exchange T&T earns, there could be a day when they return to 2018 levels.
If this happens, Hosein said it is the production side of the economy that will keep the country progressing. Therefore, it is important to add focus on non-energy producers that can earn foreign exchange.
Hosein said Minister of Trade and Industry Paula Gopee-Scoon has to look at the number of areas with comparative advantage for export.