THE unprecedented health emergency precipitated by Covid-19 in 2020 and 2021 deserves the fullest application of the nation’s resources.
The management of Covid-19 since February 2020 has also precipitated an economic crisis as well as a crisis in the education system. Unfortunately, the economic and educational fallout will be with us long after Covid-19 has gone away.
The impact of the cycle of “spikes and shutdowns” has damaged large swaths of the services sector inclusive of food services, entertainment services, accommodation, educational services and the transportation sector.
The IMF has reported that the Trinidad and Tobago economy contracted by 7.8% in 2020, the worst annual contraction since 1983. Their prediction of growth of 2.1% is threatened by the latest Covid spike and related restrictions and a significant fall in natural gas production in 2021.
For the first quarter of 2021, natural gas production fell by 19% compared to first quarter 2020. This trend will persist throughout 2021 and manifests itself as lower LNG, ammonia and methanol production.
Indeed, T&T is now producing natural gas at 2004 levels. Why was natural gas production allowed to dip to these low levels?
There are some projects such as Matapal, Cassia C, Colibri and Barracuda and Cascadura that will add production in 2022. While they will help, they will not be enough to take us back to 2015 levels of natural gas production.
Even if T&T was to experience growth in 2021, 2022 and beyond, it will not take us back to the level of GDP in 2015.
In addition, T&T will emerge from a long period of no growth that started in 2016 with carrying a debt to GDP ratio approaching 90%.
The economy is in need of urgent stimulation and transformation.
To do that we need to address the lack of interest for investing in the non-energy sector. We must address the Ease of Doing Business and the crowding out of the private sector by the State.
There is huge liquidity in the banking sector but businessmen aren’t borrowing because they lack confidence and they lack opportunities.
Fundamentally, we need to earn more US dollars from the non-energy sector as well as from the energy sector. There will be some light on the horizon in 2021 with higher oil and natural gas prices but this effect will be diminished by low levels of production.
In addition energy companies will be carrying their losses from 2020 forward into 2021 and beyond thus reducing their taxable income.
The country is in for a rough economic time for the foreseeable future but we have been here before and we emerged from those past doldrums and I am sure that with the right leadership and strategies we can do so again.
The ingredients for success have always been with us we just need to mobilise them.
T&T’s Economic Pandemic
THE unprecedented health emergency precipitated by Covid-19 in 2020 and 2021 deserves the fullest application of the nation’s resources.
The management of Covid-19 since February 2020 has also precipitated an economic crisis as well as a crisis in the education system. Unfortunately, the economic and educational fallout will be with us long after Covid-19 has gone away.
The impact of the cycle of “spikes and shutdowns” has damaged large swaths of the services sector inclusive of food services, entertainment services, accommodation, educational services and the transportation sector.
The IMF has reported that the Trinidad and Tobago economy contracted by 7.8% in 2020, the worst annual contraction since 1983. Their prediction of growth of 2.1% is threatened by the latest Covid spike and related restrictions and a significant fall in natural gas production in 2021.
For the first quarter of 2021, natural gas production fell by 19% compared to first quarter 2020. This trend will persist throughout 2021 and manifests itself as lower LNG, ammonia and methanol production.
Indeed, T&T is now producing natural gas at 2004 levels. Why was natural gas production allowed to dip to these low levels?
There are some projects such as Matapal, Cassia C, Colibri and Barracuda and Cascadura that will add production in 2022. While they will help, they will not be enough to take us back to 2015 levels of natural gas production.
Even if T&T was to experience growth in 2021, 2022 and beyond, it will not take us back to the level of GDP in 2015.
In addition, T&T will emerge from a long period of no growth that started in 2016 with carrying a debt to GDP ratio approaching 90%.
The economy is in need of urgent stimulation and transformation.
To do that we need to address the lack of interest for investing in the non-energy sector. We must address the Ease of Doing Business and the crowding out of the private sector by the State.
There is huge liquidity in the banking sector but businessmen aren’t borrowing because they lack confidence and they lack opportunities.
Fundamentally, we need to earn more US dollars from the non-energy sector as well as from the energy sector. There will be some light on the horizon in 2021 with higher oil and natural gas prices but this effect will be diminished by low levels of production.
In addition energy companies will be carrying their losses from 2020 forward into 2021 and beyond thus reducing their taxable income.
The country is in for a rough economic time for the foreseeable future but we have been here before and we emerged from those past doldrums and I am sure that with the right leadership and strategies we can do so again.
The ingredients for success have always been with us we just need to mobilise them.