The lifting of the pandemic restrictions of 2022 led to an increase in economic activity in T&T, with some sectors seeing a rebound although this resurgence was not as strong as the performance in the pre-pandemic period of the economy, according to economics lecturer at the University of the West Indies (UWI) Dr Regan Deonanan.
On his Twitter account on May 20, Finance Minister Colm Imbert revealed that T&T’s gross domestic product (GDP) per capita was 30 per cent higher in 2023 than it was in 2020.
Using Central Statistical Office (CSO) data, Deonanan gave an analysis of the conditions that could have possibly led to such favourable expansion.
“Along with the lifting of pandemic restrictions in 2022, there has been a concurrent rise in economic activity as some of the major industries rebounded. GDP from the trade, manufacturing, and mining industries, for the first three quarters of 2022, grew by 3.1 per cent, 4.5 per cent and 0.5 per cent, respectively, when compared with the first three quarters of 2021. This may be driven by the non-energy sector as non-energy GDP increased by 4.7 per cent over the same period, while energy GDP declined by 0.8 per cent,” he said in a statement.
Economists generally say that GDP per capita measures the economic output of a nation per person.
It seeks to determine the prosperity of a nation by economic growth per person in that nation. Deonanan said real GDP per capita growth is a measure of the increase in a country’s level of production that accounts for inflation and population size and it is, therefore, among the most useful and reliable measures of economic progress.
In his tweet, Imbert also compared the country’s GDP to other Caricom countries which show T&T is on par with Barbados and way ahead of Jamaica.
His tweet read: “T&T’s GDP per capita in 2023 is US$21,000, Jamaica’s is US$6,200 and Barbados’ is US$21,000. In 2020, our GDP per capita was US$16,100, Jamaica’s was US$5,100 and Barbados’ was US$16,600. Our GDP per capita increased by 30 per cent from 2020 to 2022, Jamaica by 21 per cent and Barbados by 26 per cent.”
Although, the Finance Minister’s data show an expansion of GDP per capita between 2020 and 2023, the data shows that over the almost 10-year period from 2012 to 2021 there was a decline. The GDP per capita in 2012 was $130,604 and by 2021 it fell to $109,392 according to the CSO data Deonanan gave.
“Based on publicly available data for real GDP and population from the Central Statistical Office of T&T, real GDP per capita growth was 3.4 per cent in 2013, 3.0 per cent in 2014 and the annual figures have been negative since then till 2021 (real GDP growth for 2019 is recorded as +0.1 per cent, while real GDP per capita growth is -0.2 per cent). “For the period 2013 to 2019, before the effects of the COVID-19 pandemic, per capita growth averaged -1.1 per cent annually. Real GDP per capita in 2019 was 8.1 per cent lower than it was in 2012. During the pandemic period, real GDP per capita declined by 7.9 per cent and 1.1 per cent in 2020 and 2021, respectively. Real GDP per capita in 2021 was 8.9 per cent lower than it was in 2019 and 16.2 per cent lower than it was in 2012.”
Successive Governments have been talking about increasing the GDP per capita and raising living standards for years.
Almost 10 years ago in 2014, the Business Guardian reported a speech made by then People’s Partnership Planning Minister Bhoe Tewarie who commented on what T&T’s GDP per capita would like in the future.
“In 1967, Singapore was worse than T&T in GDP per capita and in terms of general living conditions. We must create our own dream. We can be a country with a per capita income of US$40,000 instead of US$20,000 in less than ten years. We can have a GDP of $360 billion instead of $179 billion in less than ten years. We can have a financial sector that is a bridge between monies in the southern hemisphere and monies in the eastern part of the world,” he said.
Weak growth
While Deonanan acknowledged the economic growth seen in the most recent available data may reflect the rebounding of sectors that declined during the pandemic, as well as an uptick in the non-energy sector, he said this does not reflect an improvement in real GDP when compared to the pre-pandemic period.
“Total real GDP for the first three quarters of 2022 is approximately $109 billion. While this is a 3 per cent increase compared to the first three quarters of 2021, it is still 7.2 per cent lower than the GDP for the first three quarters of 2019. The figures for the annual real GDP for 2022 are not yet released. The IMF, however, in its recent 2023 Article IV Consultation for T&T, estimated real GDP growth to be 2.5 per cent for 2022 (Source: T&T: 2023 Article IV Consultation-Press Release; and Staff Report). This puts real GDP at approximately $153.3 billion for 2022, and real GDP per capita at $112,270.”
He said the COVID-19 pandemic had an adverse effect on the economy. Several of the economy’s major industries were affected.
“GDP from the trade, manufacturing, and mining industries all declined by 11 per cent in 2020. Together, these industries contribute to approximately 56 per cent of GDP. This may have been driven by developments in the energy sector which declined by 12 per cent in 2020, while non-energy GDP declined by 5.5 per cent. In 2021, energy GDP declined by a further 2.7 per cent while non-energy GDP declined by 0.3 per cent.”
Macro-economic stability
Former Central Bank Governor, Winston Dookeran, who also served as a Finance Minister for part of the 2010 to 2015 PP administration, in a statement to the Business Guardian attributes this expansion in the GDP per capita to the recent commodity price increases.
“The minister may attribute any increases to commodity price increases due to supply changes coming out of the Ukraine/Russia war and its impact on global energy prices and fluctuations. Locally, he may attribute it to ‘some incipient growth in the non-energy sector’ but it is not clear if this is sustainable, given the competitiveness of the economy. The minister can underline these positive developments as being promoted by macro-economic stability of the country’s balance sheets—fiscal and balance of payment.”
When asked if different sectors like the business sector and even ordinary people are experiencing this increase in wealth, he replied by saying that there needs to be a change to the “institutional structure.”
“Two areas of shortcomings are the prospects of endogenous growth in the economy–growth strategy from within, and income distribution trends–meaning the impact on the vulnerable sector. Here, there is little effort to change the institutional structure, which sustains income and poverty changes to the low-income groups and the lagging sectors of the economy. Pension and cost of living buffers are facing actuarial challenges, so the sustainability of the growth effort is at risk.”
He added that the economy must be managed in a way that inequalities in society are addressed.
“The policy framework for balance sheet stability is reaping rewards, but fiscal management must have economy-wide effects to deal with development and disparity of income and poverty issues and endogenous growth. The record card is the right direction; however, major institutional change may provide a stimulus for equitable development.”