(Trinidad Express) Trinidad and Tobago is officially in a recession.
Central Bank Governor Ewart Williams has confirmed what the business sector and the labour force have been reeling from for months — that the local economy contracted for the third consecutive quarter.
Gross domestic product shrank by one per cent in the last three months of 2008, then by 4.6 per cent at the start of 2009, then again by 3.6 per cent up to the end of the second quarter of this year, Williams said during a news conference to launch the October issue of the Bank’s Monetary Policy Report at the Central Bank tower, Port of Spain.
’Perhaps, by the conventional definition, we are in a recession,’ he said, referring to the three consecutive declines in GDP growth.
’But these conventional definitions need to be taken with a pinch of salt.’
He argued this ’pinch of salt’ was required because the United States was coming out of a recession now (even though analysts expect it to be a jobless recovery), and inflation has come down from 15 per cent last year to about five per cent up to September in Trinidad and Tobago.
While there are positives like this, there continues to be negative developments that continue to play havoc with the local economy. These include an increase in unemployment from five per cent to 5.1 per cent which, in real terms, translates to about 5,700 job losses in the past few months.
Even worse is that the Central Bank is now projecting a greater decline in GDP to the end of this year.
Williams said the decline in 2009 would be in the range of 1.5 per cent to two per cent, compared to an earlier projection of 0.9 per cent.
The recession could last until the second quarter of next year when investor confidence may pick up in the country, Williams told the Express following the conference.
There has also been continued pressure on the Trinidad and Tobago dollar and increased demand for US dollars in the country.
With reduced earnings in the energy sector, there was also a reduction in the conversion of foreign exchange in the first ten months of the year.
Williams noted the Central Bank sold US$1.389 billion to support demand for US currency.
He said the Central Bank has been meeting with commercial banks to better address delays smaller customers experience when they try to get cash in the range of US$10,000. But there is no need for customers to ’warehouse’ US currency, he said, adding the Central Bank had ample supplies of foreign exchange.
