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A recession deferred
Some citizens are perplexed by the country’s overall reaction to the announcement of a recession. It seems folks are confused about what it’s supposed to look like. Admittedly, it is tough to identify the beast in an economy propped up by a nanny state.
This goes back to the central point of recent columns about the paucity of accurate and up-to-date statistics. Without timely data on Christmas spending, for example, we depend on unreliable observation.
Malls and retail outlets appeared crowded and consumers bought enough fireworks to stage their own independence celebrations.
With these as our principal indicators, Trinis are left to assume that few of us are troubled by all this recession talk.
Again, in the absence of data, we can only infer from the photographs of the first major carnival fetes, that tings nice.
Fete promoters have undoubtedly been putting together these affairs months in advance and they can’t very well be expected to throw their hands up and say, “Ah well, we’ll just have to cancel…”
And what of the hedonists? Well, look, as long as people continue to collect their salaries and have a reasonable expectation their jobs will be there on Monday morning, they are not likely to alter their behaviour.
It has been predicted that the real “slowdown” will occur after Carnival. How will we recognise it, given that spending traditionally slows after the prolonged orgy of feting and consumption of Christmas into Carnival?
The situation is made more complex by a simple principle of modern commerce. Encouraging the public to “tighten their belts” seems antithetical to the notion of stimulating economic activity.
If consumers do indeed hold back in a significant way, the upshot of that could be creeping job losses owed to diminished business revenues. Those job losses would erode purchasing power, thus accelerating the pattern of job loss and private sector collapse.
No one will dispute that people should be more circumspect in the management of their finances, ordering expenditure along the lines of priority. Additionally every household, regardless of income, should save something every month. But merely telling citizens to “cut back” isn’t particularly helpful, and certainly doesn’t reflect sound economic policy. Every healthy economy needs healthy consumer spending.
As the US emerged from the prolonged grip of its last recession, there were regular reports on “signs of life” in increased consumer spending. In the US, this is an accepted indicator of confidence in the economy. When American consumers spend, they support jobs in US manufacturing and promote growth in sectors providing goods and services.
Unfortunately, it doesn’t work quite that way in this country. When T&T consumers spend, they provide support for the US and Chinese economies most notably. Buoyant consumption patterns trigger vast outflows of foreign exchange.
One panacea on offer is a dusting off the old 80s era slogan of “buy local.” That sounds great, but buy what exactly?
This is an import nation, so if a consumer decides to shun foreign junk franchises in favour of establishments selling “local” cuisine, foreign exchange is still burnt up. Think of the beloved roti for a moment. The channa, potato, even the dhal in yuh dhal puri roti skin; all imported.
The Matouk’s brand is about as Trini as you can get, yet the company has to import 50 per cent of its inputs to churn out its trademark pepper sauce. Similarly, smaller start-ups trying to market fresh fruit juices have a devil of a time sourcing fruits locally to keep up with the demand.
We would all love to support our farmers’ markets, but the variety of local fruits is, in the best of times, abysmal. Apples and grapes have become the standard bearers of fruit consumption. Local fruits, formerly abundant, appear infrequently as exotics at market stalls.
This is due, in part, to anaemic agricultural policy and the failure of past governments to actively chart a sustainable course for the sector. This is why we are buried beneath a mountain of short crops like cucumbers and tomatoes. The labour shortage is a contributory factor, but then our disdain for farming was actively cultivated through pre and post-independence political fervour.
Apple orchards in the US, strawberry fields in Brazil, grape vineyards in Spain; these countries practice agriculture as a business, a principle we seem incapable of applying to our maladaptive agri-sector. We just don’t seem to make the leap from selling fruits “by de heap” to selling them by the container-load.
Supporting investment in large scale fruit plantations which can supply our needs as well as build an export market seems the way to go. But I suppose a bamboo-pole vaulting piper will do for now.
There is little evidence of our readiness to confront the recessionary conditions we seem to have deferred until after Carnival. Also deferred are any meaningful measures to boost local manufacturing and reduce our reliance on food imports through aggressive agricultural reform.
We have had more than 20 successive years of unimaginative economic policy creating our own recession of enterprise and ingenuity. Our continued reluctance to embrace our realities makes the threat that much more worrying.
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