(Trinidad Express) The local economy will register a third consecutive year of decline if the Government does not begin its infrastructure programme spending, Central Bank Governor Ewart Williams said on Thursday.
He was speaking at a media conference to discuss the Monetary Policy Report up to April, at the Central Bank Tower, Port of Spain.
“If the Government’s infrastructure programmes do not get on track, we could have another year of tepid performance. The hard facts are that in this economy, the push normally comes from Government expenditure. That initial impulse comes from the budget, and it has not come from the budget in the first six months of the (fiscal) year,” he said.
“We anticipate that the Government’s spending on the infrastructure investment will accelerate in the second half of the year. If this comes to pass, we could expect to see growth of one to two per cent in 2011.”
The report indicated there was lower than expected Government spending in the first six months of Govern-ment’s financial year. Williams warned a third year of decline in gross domestic product would result in increased poverty. There were declines in 2009 and 2010.
“Decline saps the energy of the people; it translates into lower income for large numbers of people; it translates to increased poverty for people who are at the bottom of the income range. When you are having decline and high inflation, (this) clearly translates into poverty; another year of decline would make it three consecutive years. We don’t want to do that,” he said. “It affects the psyche of the private sector; we hope that we are seeing enough to suggest that private sector confidence is beginning to recover.”
Williams said initial projections for 2010 pointed to an economic recovery, but this did not materialise as the data now showed the economy declined by 0.6 per cent last year, following a decline of 3.5 per cent in 2009.
“In 2010, we expected the first phase of the recovery, and it did not occur. The data shows that there continued to be a decline in real GDP in 2010,” he said.
“There is sufficient evidence of an improvement in private sector confidence; the most tangible piece of evidence is the turnaround in credit expansion for consumers. Consumers are slowly beginning to spend again.”
This resurgence in private sector confidence is not yet being translated in new private sector investment. It is difficult to find any new projects going around and that is understandable,” he added.
