Accepting recurring themes of low growth and a downturn in oil prices as the new normal in world economy, and activities in China that slowed marginally to 7.4 percent in 2014 compared to growth of 7.8 percent in 2013, places Trinidad and Tobago to endure alternatives to supplement revenue returns.
Granted, there is external pressure on state resources and the recommendation for change of use to the Heritage and Stabilisation Fund, the Central Bank position is quite clear on this and has drawn the line. The fund is not a petty cash account! Further, it is not a situation where public finances are under unbearable pressure, neither is the financial sector starving for funds, nor are pensions and civil servants pay, due at the end of the month, in jeopardy. Otherwise, journalists and clever columnists masquerading as economists talking up politically sponsored spin would be all over this.
Weathering the outlook to improvements, leaders and government have the opportunity to reboot policy frameworks, incorporate fresh ideas, new engagements, innovation and knowledge that are more diverse to influence the future of the region and build stronger economies.
Delivering opening remarks at the forum on the future of the Caribbean, Senator Vasant Bharath, minister of trade, industry, investment and communications acknowledged that “finding common ground for collaboration begins with partnership; partnership empowers political will; political will motivates action; and confidence enlivens political will”.
This is encouraging in the context of political change in St Kitts and Nevis, and recently Guyana, with an abundance of resources. Up and down the region there is the capability to consolidate politically and economically, to project growth, return to stability, maximize capital and liquidity. This would strengthen credit profiles, revise international assessments and return capital generation to impact more broad based development for jobs and wealth creation.
Repeatedly, it has been said the region needs leadership. That’s a fact. The region has resources. That’s also a fact. We are a diverse people rich in culture, fashion and music. That goes without saying; however, the platform so eloquently produced in Trini mas is also replicated in political and economic exuberance in the context of regional integration.
The opportunity to summon the will to act for the long term global challenges has gone wanting before in favour of binding constraints that placates voting blocs and preferred rhetoric that proves regrettable today. But this time, the sophistication is much more astute to managing headlines and the use of clever politics.
Thus, the recovery from Moody’s downgrade and IMF low growth projections affecting the region may well serve as measurements to achieve the objectives of strong monetary policy to gain real assets, consistent purchasing power, maintain prudent fiscal initiatives and keep the lid on inflation.
Revolving matters of increased efficiency and profitability verses profitability at any cost will remain a constant balancing act; however, new solutions, technology and appreciation to gain industrial advantage in the light of the energy industry’s current projections has certainly broadened the need to strengthen strategic, managerial, and functional preparedness to respond in a swift and decisive manner to global events.
China’s economy is expected to expand by 6.8 percent this year, by IMF forecast, the slowest pace since 2008. China, the second largest economy, purchased 7.4 million barrels of oil a day in April. Compared to 7.2 million barrels purchased by the US: “Overtaking the United States means China is the top user of almost all commodities, including coal, iron ore, and most metals, with far-reaching implications for markets which continue to shift from West to East,” Reuters reported.
In 2014, the global economy grew by 3.4 percent. Economic growth in the United States was particularly strong at 2.4 percent, the highest since the 2008 financial crisis. The Eurozone recorded growth of 0.9 percent. Jamaica’s economy grew marginally by 0.5 percent. In Guyana, increased production of rice, sugar and forest products contributed to growth of 3.8 percent.
When compared to global economic growth, the IMF’s recently released Regional Economic Outlook for the western hemisphere projects growth in Latin America and the Caribbean at 0.9 percent in 2015, down from 1.3 percent last year; projecting GDP growth for Trinidad and Tobago at 1.2 percent for 2015 and 1.5 percent for 2016. These numbers, although preferred at higher projections, show no need for scaremongering down Frederick Street, with alarm bells, on the eve of the Organization of Petroleum Exporting Countries, (OPEC), meeting in Vienna June 5, to assess the market that supplies about 40% of the world’s oil.
In fact, there is great potential for the region to become the supplier of choice for oil and gas, even as price is dropping. Exxon Mobil Corporation recently reported a “significant oil discovery” on the Stabroek Block, located approximately 120 miles offshore Guyana. Stabroek Block is 6.6 million acres (26,800 square kilometers).
Haiti’s new findings indicate the existence of three million barrels of oil in a shallow formation offshore the island. Cuba, Haiti, the Dominican Republic, Puerto Rico and their offshore waters probably hold at least 142 million barrels of oil and 159 billion cubic feet of gas, according to a 2000 report by the US Geological Survey. Undiscovered amounts may be as high as 941 million barrels of oil and 1.2 trillion cubic feet of gas, according to the report.
Trinidad and Tobago can be the catalyst with its accessibility and production capabilities in stabilizing the region, taking into consideration that 92 percent of Venezuela’s oil is exported to US refineries along the Gulf Coast, with the ability to handle the extra heavy crude oil from Venezuela’s Orinoco Belt. In addition to that, the Gulf Coast is also the destination for approximately 600,000 barrels per day of Saudi exports to the United States.
With this transformation change taking place in the region, strong, inspired leaders, business leaders and major companies are essential to strengthen economic globalization and bridge the divide to provide a better appreciation to micro and macro drivers of corporate investments.
As price stabilizes, the region has the opportunity to become a leader in the game change of events politically and economically, in the formulation of key strategies to drive investment in labour, the production of material in non-energy sectors such as construction, manufacturing and distributive trades. Thus enhancing the whole value chain in a bid to overcome enduring challenges in employment creation, income generation and economic growth.
Achieving this will need a new mindfulness to find that solid path of well-being. The government of Trinidad and Tobago seems on the road in making progress towards better governance that unlocks a new approach to doing business, diversifying the economy and remaining bullish on fiscal stability that is guided by data in the national interest.
Evidence of this is reinforced by Senator Vasant Bharath’s focus on collaboration in energy, broadband and knowledge, noting that “the benefits to be gained from breaking the mold of the natural evolution of things and replacing it with disruptive new ideas for a new kind of engagement are clear. And nothing moves without political will. The very basis of innovation, entrepreneurship and change comes alive by deciding that we will adapt vulnerability to influence … and risk to opportunity.”
With optimism rising, these ideas mean that the government’s strategic foresight is both transactional and relational in nature, on the components of expansion, with the view to stimulate fiscal targets and the continuance of positive change.
By: Melanius Alphonse
Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality; the Lucian People’s Movement (LPM) www.lpmstlucia.com critic on youth initiative, infrastructure, economic and business development. He can be reached at firstname.lastname@example.org