How Much Has The Local Economy Declined In 2016?

How Much Has The Local Economy Declined In 2016?

Strangely enough, the answer seems to depend on whom you ask!  In the November 2016 Monetary Policy Report published by the Central Bank of Trinidad & Tobago, it was stated that “Following an overall decline of 0.6 per cent in 2015, GDP is estimated to have fallen by 6.7 per cent (year-on-year) in the first half of 2016, led by a contraction in the energy sector (10.8 per cent).” (https://www.central-bank.org.tt/sites/default/files/MPR%20November%202016%20-%20Draft.pdf).

The magnitude of the estimated drop caused a certain amount of alarm and concern in many quarters.  The main reason for the concern was that in the 2017 Budget Speech by the Minister of Finance, it was stated that real GDP is estimated to have declined by around 2.3 per cent in 2016.  The level of concern was apparently so great that the Central Bank has issued a “Public Education Statement” in an attempt to explain the apparent discrepancy. (https://www.central-bank.org.tt/sites /default/files/MPR-GDP%2014_11_16.pdf)

In a nutshell, the Central Bank of Trinidad and Tobago (CBTT) has stated that the Central Statistical Office (CSO) is the official source of GDP data (and is the data source that was used in the Budget) and produces same on an annual basis.  With a view to having such information on a more regular basis, the CBTT compiles a GDP index on a quarterly basis.  However, and this is very important to note, according to the CBTT, their quarterly GDP index “..does not include price effects…” and “…does not comprehensively cover all sub-industries measured by the CSO….”

It therefore means that the decline in the local economy might not be as bad as painted by the CBTT.  However, only time will tell.