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Central Bank Governor – Jwala Rambarran (left) has the attentive ear of Gerry C. Brooks – Chief Operating Officer, ANSA McAL Group of Companies (right) at this month’s AmCham’s meeting at the Hilton Trinidad, St Ann’s on Monday 8th July, 2013.
PHOTO: SHIRLEY BAHADUR
T&T and the rest of Caricom must become globally competitive or perish. This is the advice Gerry C. Brooks – Chief Operating Officer, ANSA McAL Group of Companies gave if T&T is to survive in a competitive world where everything is uncertain.
“What is clear is that Caricom must be re-engineered completely. While there has been some success in Caricom at the functional co-operation level, the current construct of Caricom is too slow in terms of policy formulation decision-making and execution. It is not a condemnation of Caricom, but a constructive call for us to rethink, refashion and reengineer the Caricom model,” Brooks said.
Brooks was speaking on Monday at a seminar on Competitiveness and Sustainable Development, hosted by the T&T American Chamber of Commerce (AmCham T&T) at the Hilton Hotel and Conference Centre, St Ann’s.
From July 3-5, T&T hosted the 34th regular meeting of the conference of heads of government of the Caricom where Caribbean leaders also celebrated Caricom’s 40th anniversary.
“Remittance income, tourism and financial services do not provide adequate horsepower to sustain vulnerable, small states historically reliant on aid, grant money and concessionary agricultural terms,” Brooks said.
“For us in T&T, reduced per capita income of our primary export markets means that we must look further afield and shop the hemisphere and the world.”
T&T falling behind
Brooks said T&T is trailing other emerging economies in important areas.
“Some key indicators include key productivity data points, like absenteeism levels, these are at six per cent nationally. Then there are the number of holidays locally and we have 16. We average more than most countries with the United States at ten and Canada at eight. As we seek to gain shelf space and market share in major markets, advantages of our lower energy costs have to be balanced against shorter production runs, higher financing costs and escalating labour costs.”
Brooks said T&T is attracting less foreign investment than other emerging economies in its category.
“If one looks at foreign direct investment (FDI) in 2012, we attracted US$1.2 billion. Comparatively, Chile and Colombia grew 5.5 per cent and four per cent, respectively. Chile attracted US$28.1 billion in FDI coming from Japan, Sweden, Australia, Spain, Peru and Australia. Colombia grew at four cent in 2012. FDI was US$13.2.”
Brooks continued, “A closer look at peer countries such as Botswana, Chile, Colombia and Qatar—whose economies are also energy-based and whose economies slipped to negative growth in 2009—show recovery, but T&T’s economy has not.
“T&T has not been able to return to return to levels of growth that it experienced prior to the global meltdown. In fact, mean growth over the period is negative 1.3 per cent. The question is: why and what must we do differently to stimulate growth in the face of continuing budget deficits?”
Caribbean economic crisis
Brooks said with the exception of Guyana and Suriname, Caribbean economies are afflicted by low growth and high debt.
“Growth in Jamaica is 0.1 per cent in 2012 with debt to GDP of 146.6 per cent. In 2012, Barbados exhibited growth of 0.6 per cent with debt increasing from 83 per cent to 88 per cent.
“Grenada’s debt level is 140 per cent with unemployment at 30 per cent and over.”
Brooks said there are at least five countries using the International Monetary Fund (IMF) facilities: Grenada, St Kitts, Barbados, Antigua and Jamaica.
He said Caribbean currencies slipping against the US dollar is “worrying.”
“Currency slippage has again occurred in Jamaica by six per cent. Currency slippage has also occurred in Guyana from Guyanese 200 to Guyanese 206 against the US,” Brooks said.
“The delicate political situation and the recent slippage of international gold prices to US$1,230 range must be managed in Guyana to ensure continued growth.”
Central Bank Governor Jwala Rambarran said although there is reason to be optimistic about the economy, there seems to be pessimism across the country.
“But this is not the message we seem to be absorbing as a nation. We seem to have a penchant for self-inflicted wounds, looking at our country from the glass is half-empty perspective. I appeal to all of us to look at our economy from a glass half-full point of view. This is actually not difficult to do. Growth is consolidating, unemployment is low, public debt is very manageable and our citizens enjoy a high standard of living,” he said.
Rambarran said the international economy is going through “unusual times.”
He painted a grim landscape.
“During the last few weeks, sentiment has changed dramatically in global financial markets, again with unintended consequences. Markets overreacted to an earlier-tha-expected start to the reduction of monetary stimulus in the US, even though the Federal Reserves clearly stated that should this commence, it would be done very slowly and would be highly conditional.”
Rambarran said the “intensity” of the market reaction contributed to a reversal of capital flows in many emerging economies, sending their economies tumbling and stock markets into decline.
He spoke about the possibility of the international economy sliding back into another recession, adding that every time a problem is solved in one part of the world, it “mutates” and rears its head in another form, perpetuating the economic crisis.
“Such volatility may well signal the start of a new mutation of the ongoing financial crisis. It may well be a forerunner to the new risks that could materialise when unconventional US monetary policy begins to unwind in earnest.”
Rambarran spoke about unresolved issues that could have serious global consequences.
“Many of the ‘old’ tail risks, like low probability and high impact events in the global economy, such as a breakup of the Eurozone, the US going over the fiscal cliff, a hard landing in China, still remain unresolved,” Rambarran said.
July 11, 2013
Story by: Raphael John-Lall