Central bank stats confirm T&T recession

Media reports in Trinidad and Tobago quote official statistics from the Central Bank to declare that the country is in recession. But opposition leader Basdeo Panday used that same data last week to declare that the country is in recession and that there are tough times ahead.

The bank's Summary of Economic Indicators posted on its website on July 23 shows that the country has not only experienced two successive quarters of negative economic growth in its real GDP but declined across several sectors.

According to the official data economic growth fell by more than four per cent in the period October 2008 to March 2009. The first quarter of 2009 showed a 3.3 per cent decline in real GDP while the last quarter of 2008 showed a 1.1 per cent drop.

This comes as the government is urging citizens to go on a spending spree.

Last week Prime Minister Patrick Manning said it is time to end the belt tightening and take advantage of existing opportunities in the financial sector.

"I would like to suggest to you that whereas we had called on you to tighten your belts at the first sight of the downturn in the United States, I must now say the time has come for you to release your belts."

Manning said it is time to increase economic activity, noting that the country's Heritage and Stabilisation Fund has reached US$2.9 billion and continues to grow.

“Whereas so many countries around the world are experiencing a shortage of cash, we have a surplus of cash that is now available to utilise as we seek to increase the level of economic activity,” he said.

However Central Bank Governor Ewart Williams had warned that the Trinidad and Tobago economy was decelerating faster than anticipated and the country would likely register zero, or even negative GDP growth this year.

He called it "stagnation", insisting that the economy was not in recession.

Panday didn't share that view and called Manning irresponsible. Panday, who is an economist and lawyer, said last week recent economic data showed that Trinidad and Tobago is in a recession and inflation will start climbing again soon.

"Economic data released by the Central Bank during the last week show two consecutive financial quarters of negative growth in 2008 and 2009. That means the country has been in a recession for some time," Panday said.

He said the current third quarter is also not looking good partly because of "the contraction in the manufacturing sector, reduction in demand caused by our CARICOM neighbours tightening their own belts and increased unemployment due to lack of business confidence and pressure on the foreign exchange system."

The former prime minister also noted that while the inflation rate has gone down, food inflation remains high at more than 16 per cent.

"It is therefore foolhardy advice from the Prime Minister for people to spend away the little they may have while the country is tossing around in a recession and as things get increasingly worse every day."

“I don’t think the population should pattern the irresponsible, reckless and wasteful habits of the Prime Minister of spending away every cent in sight when they should be saving and preparing for tough times,” Panday said.