Posted on August 5, 2009 by 137 @ 11:26 am | Category: Uncategorized
According to Wikipedia, a ‘recession’ is “a general slowdown in economic activity over a sustained period of time, or a ‘business cycle contraction’… Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes and business profits all fall…”
It is often defined simply as “as a period when GDP falls (negative real economic growth) for at least two quarters.”
According to the Trinidad Express (05.08.09) article, “YES IT’S HERE” “Trinidad and Tobago is in recession – according to data released by the Central Bank”
The article states that the last quarter of 2008 showed a 1.1% decline in real GDP, whilst the 1st quarter of 2009 recorded a -3.3% movement.
According to the simple definition above, that seems a straightforward case of recession. However, the IMF “advises that a broader number of indicators be used to ascertain whether or not a country is facing a recession.”
According to the article, information on the Central Bank’s website indicate declines across several sectors.
The CB Governor goes on to say that “the available data showed that the Trinidad and Tobago economy was decelerating faster than anticipated and the country would likely register zero, or even negative GDP growth this year.”
He also found it necessary to add that “the country’s economy was not in recession but in ’stagnation’.”
Trinidad and Tobago’s Finance Minister, Mrs. Nunez-Tesheira, during an address to the media, admitted that “There is an economic slowdown and therefore a stimulus is required. There are things that we must do and partner (with the private sector) to achieve.”
Again,according to Wikipedia, “Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.”
However, she stands with her fellow Ministers and our beloved Prime Minister, in categorically denying that we have been experiencing a recession and “it takes more to make a recession than just negative or slowed growth.”
The views purported in the article “Economists see more decline”(05.08.09) in the same newspaper convincingly beg to differ.
“Several local economists agreed yesterday that although the quarterly figures could be argued, they did in fact indicate a recession.”
…And if distinguished economists unanimously agree, who am I to argue..?
Economist Mr. Jwala Rambarran says, “We see a sharp drop in retail sales and that tells you across the board consumers are spending less…In three to six months down the road we are going to see the number of projects and the number of jobs decreasing…the data from the second quarter would prove that we are already nine months into a recession.”
In what could be considered a response to Mrs. Nunez-Tesheira’s indication of a stimulus package, Mr. Rambarran states, “We are almost a year late in putting together a stimulus. A stimulus plan should have been put into place since earlier this year.”
According to the article, Mr. Rambarran said the government could easily refute the claims of a recession because there was no official body in Trinidad and Tobago that could declare a recession except the Central Statistical Office, which publishes statistics annually and not quarterly.
“Those numbers are not considered official numbers but whether or not they recognize (it), it is there. It is one piece of evidence that we are in a recession.”
So…are we..? Though all indicators allude to one conclusion, and until the effects are so far-gone and so integrated into our economy and social fabric, the answer ‘technically’ will remain ‘No’…
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