IN YESTERDAY’S Sunday Express, The University of the West Indies (UWI) economist Vaalmikki Arjoon described the Government’s management as “fantasy economics”, pointing to the current administration’s lofty promises but meagre achievements.
He noted the impact that the slowdown in the economy and the shortage of foreign exchange has had on the retail sector and the population’s standard of living.
Arjoon’s explanation of the performance of the Trinidad and Tobago economy continues below:
In the first eight months of 2019, the Central Bank said that 834 persons were retrenched; but this only reflects reported retrenchments.
Arjoon explained that many job losses go unreported because once a firm retrenches fewer than five workers, they are under no obligation to report this information.
“Therefore, if 1,000 firms retrench four workers, then that’s 4,000 workers on the breadline, which likely goes unreported. It is therefore no wonder that retail sales have fallen by 16 per cent from 2015 Q3 to 2019 Q1, as not only has the cost of living gone up, many persons are also jobless while others received pay cuts. Owing to the severe uncertainty in the economy, many consumers and businesses alike are hesitant to spend whatever little savings they have left.
“Between 2015 Q3 to 2019 Q1, sales in supermarket items, construction and materials, household appliances and furniture and textiles and apparels have fallen by ten per cent, 33 per cent, 13 per cent and 36 per cent, respectively,” he said.
While the inflation rate is currently low at 1.2 per cent, prices rose significantly in 2015 when VAT of 12.5 per cent was re-introduced on hundreds of previously zero-rated items.
In 2015, food prices rose by more than eight per cent and then another seven per cent in 2016.
Arjoon explained, that from a theoretical perspective, that while the price of a bag of groceries went up, many individuals were retrenched and others faced pay cuts, which is continuing to this day.
“Prices increased, while household incomes fell. Even though prices are currently increasing by a meagre 1.1 per cent, the damage has already been done — persons have not been compensated by an increase in their wages — in fact, they faced higher prices and a fall in salaries, while some were left with no salaries at all.
“The shutting down of Arcelor Mittal and later Petrotrin would have compounded this, not only for the employees in these companies but also the employees of other companies reliant on Petrotrin and Arcelor Mittal for business,” he said.