NOTWITHSTANDING that global economic activity remained subdued in the first half of 2019, held back by weaker-than-expected international trade and investment amid ongoing tensions between the US and China, this country’s economic activity is anticipated to expand moderately in 2019.
The latest economic bulletin from the Central Bank, published last week, is something of a pre-budget boost to the government. The forecast, driven by bolstered natural gas production, accelerated execution of government’s capital projects, higher international commodity prices, and regional improvements in economic performance, is welcome news at a moment when all eyes will be on stewardship of the economy going into an economically and politically charged election period.
Prime Minister Dr Keith Rowley and his Finance Minister Colm Imbert will be looking to replicate the upbeat tone of Dr Rowley’s historic ringing of the Nasdaq bell, which came, fittingly enough, on the day the Central Bank released its bulletin.
However, climate change-related matters could well dampen TT's economic prospects, with the Central Bank also warning of the potential for weather-related shocks to aggravate inflation in the agricultural production sector. On the external accounts, expected improvements in economic performances of other Caribbean economies could be hampered by the fallout from hurricanes, such as the experience of the Bahamas with Hurricane Dorian.
It should also be noted that, for the moment, the Central Bank has thought it prudent to maintain its repo rate as expected spillovers from increased spending on the manufacturing and private construction sectors are not yet evident.
Therefore, a balanced perspective should inform next Monday’s presentation. Despite positive indicators, there remain signs of dependence on the energy economy, which, as we have said repeatedly in this space, is far from ideal.
Government must use the opportunity of next week’s debate to signal an aggressive approach to diversification. Such an approach could well gain from highlighting the much-touted creative and information and communications technology sector. As noted by NCC chairman Winston “Gypsy” Peters at the launch of Carnival 2020 on Sunday, our national festival remains the catalyst for a range of economic benefits.
But Dr Rowley’s visit to New York also underlines the potential for growth and development in our tourism and manufacturing sectors — drawing on the TT diaspora. That diaspora is both a market and a resource, which can boost multilateral opportunities and help advance this country’s economic policy at home and abroad.
All of this cannot, however, occur in a vacuum. Business chambers have consistently pointed out the need to make doing business easier. This is not to say there should be deregulation or removal of basic checks and balances. Rather, it is to acknowledge that the system is sometimes overburdened with inefficiencies that are major turn-offs to budding entrepreneurs as well as long-established business.
The budget is the ideal platform to set a clear direction as the economy moves forward. That direction should be mindful of the need to be cautious about future growth projections while also positioning the economy to make even more robust strides beyond 2020.