Pay attention to economic conditions in T&T

ONE of the things that Barbados has to watch out for will be the likelihood of a fall-out from the troubles which the Trinidad and Tobago economy is going through. 

 

The Trinidad and Tobago oil-based economy is in recession, and last week the Government there offered up a strong suite of measures to shore up the economy, which is the most dynamic in the Caribbean.

 

New impositions – including property taxes; additional excise duties; hikes in the price of diesel; cuts in subsidies and expenditure; measures to stimulate economic sectors; and plans to sell off some state enterprises – are among the policies revealed by the Minister of Finance, Colm Imbert, while presenting the country’s 2016/2017 Budget.

 

 These are bold policies aimed at erasing a deficit of four per cent of GDP and to promote economic growth, which recent information indicated was down five per cent earlier this year. 

 

Trinidad and Tobago is Barbados’ main trading partner in the Caribbean. It absorbs about $90 million in exports from this country, accounts for a sizeable number of Caribbean visitors coming here, and significant investments into Barbados  originate from Trinidad and Tobago.

 

Recessions and the resulting economic austerity usually cause people to cutback on their spending until conditions improve. Therefore, any negative developments that are likely to cause these things to happen could have a negative impact on Barbados, which itself is having difficulties with low growth, rising debt, falling reserves and downgrades.

 

In one of the post-Budget discussions, an economist suggested that the Government of Trinidad and Tobago change the exchange rate,  which, should that take place, would also have 

severe implications for Barbados.

 

 What is happening in Trinidad and Tobago is symptomatic of economic troubles across the region, and how susceptible they are to global events. The problems there stemmed from the collapsing price of oil, which is the base on which the economy functions. The difficulties facing the other services-based economies in this region are largely from shortfalls in tourist arrivals at the height of the global financial meltdown.

 

The economies of the tourism-based economies have started  to recover, albeit at a slower pace,   since growth has been very marginal.

 

Mr. Imbert is quoted in the media as saying that the budget is predicated on an oil price of between US$48 a barrel and US$50 a barrel. 

 

There are those who believe that economic diversification holds the key to economic survival and sustainability in the Caribbean. As regards Trinidad and Tobago, some of the commentaries have called for the diversification around the energy-based economy, noting that what is taking place there is a reflection of similar happenings in the early 1980s, when the country faced problems with falling oil prices.

 

This came out in both the pre- and post-budgetary discussions, which have taken place and which will continue to be a talking point.

 

As for the regional territories, they have been reminded as well that over-dependence on tourism and international business is not a good thing. Everyone hopes that Trinidad and Tobago will get over this, and that economic improvements will return to the islands.