Economist: Diversification absolutely imperative in next decade

Monday, December 30, 2019 - 10:30

Economist Dr Indera Sagewan says diversifying the Trinidad and Tobago economy beyond oil and gas, has become an absolute imperative in the next decade.

As she looked ahead to 2020 and beyond, Dr Sagewan warns that an over-reliance on any one particular sector can no longer continue.

She notes that the political administrations which governed over the past decade did make a start at diversification, but those efforts have not borne fruit, nor did they get the kind of support they needed.

She says we cannot afford to continue putting all our eggs in the energy sector basket.

“When you look at the fact that renewable energies, and the accelerated rate at which they are improving, and cost is going down and use is taking place,” she notes. “And the issue, for example, of reducing our carbon footprint and so many developed countries making policy decisions to move away from the use of fossil fuels. Our future cannot continue to remain down that road.” 

Unemployment and manufacturing

According to the economist, one major blow to the economy over the past year especially, has been an increase in unemployment.

She notes that in addition to the refinery closure at Petrotrin, there have been hundreds of people let go from major manufacturing concerns, a direct result of the contraction of the manufacturing sector.

“What you’re seeing happening is that companies are moving their manufacturing capability from Trinidad and Tobago to other economies; other economies in the region or elsewhere,” she points out. “That is not a good thing for us. We have to take stock as we look to the future. We have to analyse the reasons why this is happening. And we have to put measures in place in order to stop that drain that is happening. We have to be growing our manufacturing sector.”

De-monetisation and $100 bills changeover

Dr Indera Sagewan is wondering just how successful was government’s de-monetisation programme, namely the changeover from cotton-based to polymer $100 notes.

She recalls that government said it wanted to deal a major blow to the black economy and illegal finances.

According to the economist, the roll-out of the programme was not the best, and may not have helped the state achieve its objectives.

She also observes the exercise should have been a major wake up call for the banking system.

“At the end of the day, would we have really dealt the blow to illegal activity? Or would we have dealt a significant blow to the micro-enterprises, small businesses and individuals who, for good reason, do not have faith in the current banking system?” Dr Sagewan asks. “You have the charges you are subjected to in terms of having your money in the banks, versus just basically keeping your money where you feel comfortable that it is safe. There are a lot of people who are now learning, who did not and do not have bank accounts, because they do not trust the banking system.”

She adds: “Hopefully that is a wake-up call for the banking system to say, ‘Well listen, what do we need to do to do different going forward, in order to encourage people to put their monies with us more’?”

Dr Sagewan also maintains that more time should have been given before the value of the cotton-based bills was completely removed or de-monetised.

“Let’s say two years down the road I find a stack of old $100 bills,” she posits. “While I may not be able to transact business at a store with it, I should be to take it into the Central Bank or a commercial bank and have it exchanged, because I should not be penalised for the fact that I was storing value in what I believe is one of my country’s significant store value.”