HOW DO we define an economic turnaround and what are the indicators? Not being an economist one would suggest that the macroeconomic indicators of changes in the balance of payments, real gross domestic product growth, end-of-period inflation and reserves (months of imports of goods and services) are good starting points.
The question remains whether the conclusion, following the assessment of performance, should be based on improvements in one or all the indicators and over what period of time.
Let us for a moment hold on that and look at our country’s performance over the fiscal years 2016/2017 and 2017/2018. TT recorded successive quarters of negative growth in 2017 while in the first three quarters of 2018, GDP growth was positive.
The Central Bank’s Economic Bulletin for January reported that low inflationary conditions persisted during the second quarter of 2018 and headline inflation was 1.1 per cent in December 2018, down from 1.2 per cent in July. The Government advised also that the country possessed nine months import cover, that our official gross foreign reserves exceed typical benchmarks of reserve adequacy and that the foreign exchange rate was stable.
A few other indicators are worthy of mention. The fiscal deficit as reported by the bank was reduced from $13.5 billion in FY 2016/2017 to $5.4 billion (provisional estimates from the Ministry of Finance) in FY 2017/2018 while in terms of debt, in December 2018, total public sector debt (net of open market operations) increased to $98.9 billion or 62.2 per cent of GDP from $95.5 billion or 61 per cent of GDP at the end of September 2018.
Based on data from the Central Statistical Office, the unemployment rate increased to 4.4 per cent in the fourth quarter of 2017 and in light of the closure of the Petrotrin refinery and job losses in the communication sector, we can expect a further softening of the employment conditions.
The IMF Article IV consultation on August 31, 2018, assessed that good progress had been made in fiscal consolidation through spending cuts, but public debt continued to rise approaching the Government’s soft target of 65 per cent of GDP.
The IMF further advised that the external position was weaker than the level consistent with medium-term fundamentals and desirable policies, but gross international reserves provide significant financial buffers, along with the Heritage and Stabilisation Fund. The World Bank in its April 19 press release revised the growth forecast for TT from negative one per cent to positive 0.7 per cent, taking into account recently released data of quarterly sectoral GDP and non-energy production in the last quarter of 2018, which showed a faster pace of economic activity than previously estimated. The bank also revised the country’s forecast for 2019 to positive 0.9 per cent.
So there were improvements in 2018, but have we turned around? Ask the economists, they would probably say no. Ask the politicians, they would say yes. And since politics trump economics, moreso mere months before Tobago House of Assembly, local and general elections, guess who wins?
While one would not question the call at this time to “ease the squeeze,” perhaps communication of the performance achievements could have been done differently. We have grown accustomed to handouts, either in the form of subsidies or grants and have been consumed, as Raffique Shah said, “by a fog of materialism.” Our expectations need to be redirected towards embracing stronger human values and increasing our productive capacities.
Credible information is an invaluable ingredient in formulating perceptions and making decisions. There are immeasurable benefits to be derived from communication that is effective and efficient as it engenders proper understanding.
The performance therefore should have repeatedly been expressed in the context of the macroeconomic benchmarks, where we are and our strategy for getting there, all centred on a sustainable country first approach, underscored with basic human values and seasoned, curry-flavoured if you like, by our watchwords, Discipline, Tolerance and Production.
This responsibility to educate, while residing mainly with the political directorate, carries a role for every one of us as patriotic citizens of this beautiful paradise to positively contribute to the edification process.
Your contribution could be critical, but it must be constructive as this strengthens the process. So let’s stop the silence and let’s walk this talk together.