BETWEEN February 26 and March 8, staff of the International Monetary Fund (IMF) visited these shores and, at the end of their mission, made upbeat findings.
“For the first time in a decade, TT is undergoing a gradual and sustained economic recovery,” the IMF declared in a statement dated March 11. It cited the expansion of real gross domestic product (GDP) by 2.1 per cent, the “strong performance” of the non-energy sector, a stable financial sector, a current account surplus and strong foreign reserves, among other things.
Colm Imbert, in a swift reaction, said he was “heartened” by the findings. But the Minister of Finance seems to be the only one.
“The IMF says that things are looking up,” said David Abdulah, the MSJ leader. “But what are ordinary men and women feeling? Are lives better? The answer is a resounding no.”
Once again, there’s a disconnect between the findings of an international agency and the feeling on the street. This is not limited to IMF reports – we see it too in the reception given to statistics released by the Central Statistical Office (CSO), the Central Bank and every government. This is not unique to TT, either. For example, US President Joe Biden’s first year in office saw that country’s economy add six million jobs, the greatest year of job creation in American history. And yet these gains have not sunk in for many US citizens, particularly Republican voters. Donald Trump this week was allowed to get away with shocking and dangerous “bloodbath” rhetoric, ostensibly over the state of the US car industry, as he continued his march to November 5.
Part of this has to do with the fact that economic indicators have more bearing on the long-term picture. Entities like the IMF are in the business of projecting. Meanwhile, people are more immediately concerned about the money in their pockets.
In this regard, one indicator of more instant relevance is the inflation rate. The IMF noted this has cooled sharply, to just 0.3 per cent in January (the CSO this week confirmed inflation’s stabilization with a rate of just 0.8 per cent in February). This is undoubtedly good news, given that inflation was approaching double digits in some sectors in previous years.
Mr Imbert has interpreted the IMF’s forecast of the “balance of risks” being tilted to the upside in the medium- (though not short-) term as a sign that “the balance of probability is that our economy will continue to improve.” The problem with this, however, is that the risks surrounding key initiatives, such as the Dragon gas field deal with Venezuela, are very real.
Closer to home, the gloomy crime situation continues to have a stifling and unquantified impact on all enterprises. Meanwhile, the recent Salaries Review Commission recommendation of enormous pay hikes for top public officials, if approved, could throw gasoline on the fire of our tense industrial relations climate, making the IMF’s recommendation for the rebuilding of this country’s economic buffers even more important, notwithstanding the positive outlook.
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