Pushing policy reforms, Trade Minister confident about growth forecasts
In the past ten months, Trade, Industry and Investment Minister Vasant Bharath has pushed through legislative and policy reforms that make it easier to do business in Trinidad and Tobago, and he is confident that the economy will achieve positive growth in 2013 as predicted, recently, by both the International Monetary Fund (IMF) and the Central Bank.
Bharath cut the number of days it takes to start a business from 43 to three. He piloted the single electronic window—TTBizLink—to significantly reduce delays on permits and approvals. He is working with Planning & Sustainable Development Minister Bhoendradatt Tewarie to clear the backlog of construction permit requests, with approvals on new requests within 60 days.
He’s now mandated “tangible, measurable results” from one of the region’s marquee investment events, the upcoming Caribbean Investment Forum (CIF) 2013.
Bharath was speaking at the CIF launch on May 14 at the Hyatt Regency, Trinidad. This year’s forum is themed Caribbean Competitiveness — the Nexus of Innovation & Entrepreneurship and will be held on June 10 and 11 at the Hilton Trinidad Hotel & Conference Centre.
The Trade Minister hinted at public sector development plans aimed at building capacity and strengthening T&T’s macroeconomic advantage.
“Thirty thousand ships pass 25 miles off our coast annually, and we are strategically placed to do maintenance and repair on those vessels. All we have to do is set up the infrastructure and get them to come to Trinidad and Tobago,” the minister said.
The International Monetary Fund (IMF) predicted growth of 3.5 percent for the Caribbean and Latin America (CALA) region in 2013; a welcome increase from last year’s 3 percent growth.
The IMF published its forecast on May 6 in the 2013 Regional Economic Outlook report, and singled out the region’s financially integrated economies (Chile, Peru, Colombia) and commodity exporters, like Trinidad and Tobago, Guyana and Belize, as the most likely to achieve or exceed projected growth figures.
Tourism-based economies are still recovering slowly; Barbados’ forecast shows only 0.5 percent growth for 2013, as does Jamaica’s. But Guyana is expected to grow by 5.5 percent this year, while Trinidad and Tobago and Belize are nearly on par, with predicted growth rates of 2 percent and 2.5 percent respectively. Trinidad and Tobago’s projected growth rate is the fourth best in the Caribbean, topped only by Haiti’s (6.5 percent), Guyana’s and the Bahamas at 2.7 percent.
T&T’s Central Bank Governor Jwala Rambarran was even more optimistic. While speaking to the media on May 7 about the Central Bank’s April 2013 monetary report, he projected that T&T’s economy would grow by 2.5 percent in 2013.
“I see no reason not to accept what the Central Bank governor has suggested as a growth rate and be very confident that we can achieve it,” Bharath told the media.
Both the Central Bank and IMF predictions hinge heavily on the state of the energy sector, which accounts for nearly 50 per cent of T&T’s GDP. Major energy sector companies bpTT and BG T&T have scheduled long-term maintenance work later this year that may seriously affect production.
A statement from Central Bank officials said, “The latest IMF projection is very close to our 2.5 percent. Both the IMF and the Central Bank note the risk in the energy sector due to projected maintenance activity in the latter part of this year, adding to forecast uncertainty.”
However, Central Bank officials say that Trinidad and Tobago’s other sectors, which include industries like banking, tourism, agribusiness, and light manufacturing, are poised to grow even more than projected.
The Central Bank statement said, “On the non-energy side, both institutions [the IMF and Central Bank] are of the view that growth could be closer to 3 percent, barring major shocks to the external environment and/or heightened industrial tensions, and assuming also that public sector investment projects are implemented as scheduled.”
Current public sector investment projects include a TT$250 million fund that will use government-guaranteed loans to assist with debt restructuring and upgrades for tourism-related businesses in Tobago.
The report gives comprehensive coverage of several key economic indicators for CALA, including public debt, unemployment rates and Sovereign credit ratings (based on Standards & Poors credit rating). According to the report, Chile’s credit rating is the best in the region at ‘AA-’, followed by Trinidad and Tobago at ‘A-’. But 94 percent of Latin America and the Caribbean countries maintain fairly good credit ratings no lower than ‘B-’.
The IMF’s report advises that the Caribbean’s weaker economies should increase their competitiveness and use regional integration to create stable individual economies.
In Latin America, the IMF said that uncertainty about government fiscal policy contributed to last year’s dip in growth. But wage growth, an inflow of foreign investment and the creation of new jobs will help to account for the projected economic growth. For example, the report said that Panama’s growth is the strongest in Central America, thanks to the expansion of the canal (which has brought large amounts of private foreign investment) and a large public sector investment campaign.
And other CALA countries are strategically located to take advantage of this regional growth. Trinidad and Tobago’s Point Lisas Industrial Port Development Corporation (PLIPDECO), which controls the deep water port in south Trinidad, plans to expand existing harbour space to berth shipping vessels that can carry over to 12,000 containers, more than twice the size of the shipping craft that currently service the region. The port also plans to add six more berths.
According to the IMF, most Latin American economies remain stable, with solid inflation rates, low unemployment rates and good bank credit growth. Fiscal restraint and financial sector regulation is still advised to guard against financial vulnerabilities, the report said.