TT exporters face challenge

Hurricane Ivan may have blown a hole in pockets of Trinidad and Tobago’s domestic exporters but it could also present opportunities for them, according to Republic Bank’s economic news letter. Last year Grenada, Jamaica and St. Vincent and the Grenadines accounted for $308m, $2,195m and $208m respectively of this country’s exports, the news letter said. But the recent hurricane damage throughout the region could present challenges to domestic exporters as these countries purchasing power is reduced conversely. It could also present opportunities for the construction and hardware supply sectors, the bank said “Altruism aside, TT has vested interests in ensuring that these economies rebound as quickly as possible,” the news letter pointed out. On the  2004/5 National Budget, which is expected on October 4, the bank said government will find that the  economy has registered yet another good year of performance.

“As expected, the Ministry of Finance announced that stronger than budgeted oil prices will make for a Budget surplus of approximately $437 million and almost $800 million will be added to the Revenue Stabilisation Fund, bringing it to a total of $2.7 billion. “The hiving off of surplus revenue for ‘stabilization’ after current and capital expenditure has been allocated is positive,” Republic said. “However, it is time that we give serious consideration to the locking away of some of these resources solely for future generations in a facility along the lines of the Alberta Heritage Savings Trust Fund. On the CARICOM Single Market and Economy (CSME), the bank said trade and other policies are intended to help members import, export, travel, invest, save and in general to conduct business far easier than is presently the case.

“Free movement of goods and services mean that member countries cannot impose any restrictions such as import duties, export duties and tariffs. They must also fully facilitate the free transit of goods and services throughout the Community,” the news letter said.For consumers, the bank said the CSME can lead to a reduction in prices,  It is not to be denied that the CSME also brings challenges to individuals and businesses alike, but businesses will have to compete as the market is opened. “Competition forces efficiency, which at the same time might result in downsizing of staff or even closure, which would result in unemployment. As companies expand into regional markets they would face the risk of operating in relatively unfamiliar markets,” the economic newsletter said.

While no official data is as yet available, Republic Bank estimates an almost 4.0 percent increase in real output between April and June 2004, which compares favorably with the 0.7 percent increase in first quarter. Reduced flour prices? On the heated question of price increases, the bank said while the overall inflation rate grew 1.3 percent, food prices rose 3.7 percent in the first quarter. “The second half of the year promises to be interesting, as several different factors will impact prices. The high prices faced by food processors over the period as a result of strong price surges for wheat, corn and soya on the international markets appear to have cooled in recent months and a new domestic supplier of flour is promising reduced prices. “On the other hand, there are indications of increased inflationary pressures on fresh produce due to severe flood-related crop losses experienced  by domestic farmers with the loss of imports from regional crop destruction still to be factored in.