Central Bank Governor Dr Alvin Hilaire says TT’s economy steadily revived during the 2021/22 financial year as business activity reopened following the pandemic lockdowns.
In the Central Bank (CB) annual report for the year ended September 30, 2022, Hilaire said there were signs of measured economic recovery domestically in several fields, which led the CB to keep the Repo rate at 3.50 per cent as it monitored the evolution of the data and market intelligence. The 2022 report was published on the CB's website on October 7.
“There are good signs of a measured broad-based recovery domestically. A revival of business credit has provided support to manufacturing, construction and distribution activities. The energy sector, as well as Government revenues, benefited from the rise in global energy prices.
“The openness of the domestic economy also meant that the escalation in international commodity prices was passed on locally. Domestic inflation reached over six per cent in August and September and is likely to move higher in the final months of 2022.”
The report said increased energy and petrochemical prices contributed to an increased inflow of foreign currency but the resumption of business activities after covid19 restrictions were lifted heightened the demand for foreign exchange.
As a result, authorised dealers purchased US$5,356.5 million in foreign exchange in the 2021/22 financial year, a 52.1 per cent increase compared to the previous financial year.
“Energy sector conversions, which remained the primary source of inflows to the market, rose by 66 per cent and contributed 74.2 per cent of the dealers’ total purchases from the public for the year.
“The bank maintained its regular interventions in the market, selling a total of US$1,250 million to the authorised dealers during the year. Sales of foreign exchange by authorised dealers to the public reached US$6,257.2 million during the financial year 2021/22, an increase of 35.1 per cent from the US$4,631.2 million sold in the previous financial year.”
It added that the TT dollar depreciated slightly over the year from TT$6.7795 to US$1 at the end of September 2021 to TT$6.7803 to US$1 on September 30, 2022, and the TT government deposited US$164 million into the Heritage and Stabilisation Fund during the year.
In addition, at the end of September 2022, gross official reserves amounted to US$6,769 million which was US$110.6 million lower when compared to the end of December 2021. And average excess liquidity in the financial system decreased from $9.7 billion in the previous year to $5.2 billion during the 2021/22 financial year.
“Ample liquidity, coupled with low-interest rates, and a rebound in activity in the non-energy sector saw strong growth in private sector credit over the financial year, particularly credit to the business sector.”
Also, during the nine months to June 2022, the unemployment rate declined to around 4.8 per cent from 6.1 per cent during the same period the year before.
Hilaire said because of policies created to deal with high inflation, weak growth was expected in many parts of the world in the following financial year. There were also underlying risks associated with cybersecurity, climate change and intensified international competition. However, he said CB was “well poised” to confront those challenges.