Pe­ter D Nep­tune

The Cen­tral Bank Gov­er­nor has ad­mit­ted Trinidad and To­ba­go is in a re­ces­sion. In an ad­dress to the me­dia and stake­hold­ers at the re­lease of T&T's Mon­e­tary Pol­i­cy Re­port for Oc­to­ber, Gov­er­nor Ewart Williams con­firmed T&T ex­pe­ri­enced three con­sec­u­tive quar­ters of de­cline in gross do­mes­tic prod­uct (GDP) since the fourth quar­ter of 2008. He said: "If we use the con­ven­tion­al de­f­i­n­i­tion of a re­ces­sion to be at least three con­sec­u­tive quar­ters of de­cline, then I will have to say we are in a re­ces­sion. "How­ev­er, con­sid­er­ing the po­si­tion of the coun­try and the fact we have man­aged to avoid the worst im­pacts of the glob­al down­turn, I would take that de­f­i­n­i­tion with a pinch of salt. "Per­haps we are in a re­ces­sion. What's in a word?" he asked.

The gov­er­nor said re­al GDP was es­ti­mat­ed to have reg­is­tered a de­cline of 3.6 per cent in the sec­ond quar­ter of 2009, fol­low­ing de­clines of 4.6 per cent in the first quar­ter of 2009 and a 1.0 per cent de­cline in the last quar­ter of 2008. The gov­er­nor pro­ject­ed there would be a small growth in GDP over the next two quar­ters, but it would not be enough to pull back the over­all de­cline for 2009, which he pro­ject­ed to be around two per cent by the end of the year. He added: "While the en­er­gy sec­tor grew by 2.2 per cent, the non-en­er­gy sec­tor de­clined by 7.5 per cent in the sec­ond quar­ter of 2009. "With­in the non-en­er­gy sec­tor, the sec­ond quar­ter in­di­ca­tor re­veals a de­cline in ac­tiv­i­ty in the con­struc­tion and the dis­tri­b­u­tion sec­tors and a pro­nounced fall in man­u­fac­tur­ing out­put."

He said the de­cline in eco­nom­ic ac­tiv­i­ty and de­mand and the de­layed im­pact of the de­cline in food prices have con­tributed to a sharp fall in the in­fla­tion rate from a high of 15.4 per cent in Oc­to­ber 2008 to 4.9 per cent in Sep­tem­ber 2009. "Avail­able in­di­ca­tors for the third quar­ter of 2009 show no con­vinc­ing signs of a pick-up in pri­vate de­mand, so the Cen­tral Bank is now pro­ject­ing a de­cline in GDP in the range of 1.5 to 2 per cent, com­pared with ear­li­er pro­jec­tions of 0.9 per cent," Williams said. The sto­ry was not all bad news, how­ev­er, as he not­ed a sig­nif­i­cant de­cline in head­line in­fla­tion, suc­cess in con­trol­ling un­em­ploy­ment and the turn­around of the glob­al econ­o­my.

He said: "Giv­en the sig­nif­i­cant eas­ing of in­fla­tion­ary pres­sures over the past few months, the bank's pro­jec­tion of end-De­cem­ber in­fla­tion has been re­vised down­wards to be­tween five and six per cent. The head­line in­fla­tion tar­get for 2010 re­mains low at five per cent." He said the strength­en­ing of oil prices, the con­sol­i­da­tion of the glob­al re­cov­ery and fur­ther in­ter­est rates re­duc­tions could help boost do­mes­tic con­sumer con­fi­dence and lead to a mod­er­ate pick-up in pri­vate de­mand by about the sec­ond quar­ter of 2010. He added: "This, com­bined with planned Gov­ern­ment ex­pen­di­tures on in­fra­struc­tur­al projects, should con­tribute to the achieve­ment of the two per cent growth rate pro­ject­ed for 2010.