Trinidad must brace for slow growth

Saturday, November 21, 2009 10:38 PM

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Business

Renuka Singh

Friday, October 23, 2009

Trinidad & Tobago must brace for slow economic growth next year and in 2011.
This was the warning from career banker Steve Bideshi.

Bideshi, who returned to Trinidad and Tobago four months ago to help restructure the CL Financial conglomerate as its managing director and group chief executive officer, admitted that CL Financial failed to plan for the
worst and did not institute the requisite "stress tests" of the group's operations.
He advised other private sector businesses not to fall into the same dilemma.

Bideshi, who was one of the speakers at an Institute of Chartered Accountants of Trinidad and Tobago (ICATT) meeting at the Hilton Trinidad, also warned the business sector to brace itself for a "subdued rate of growth in 2010 and 2011".

He based his predictions on three economic factors that arose as a result of the global economic crisis.

"We will see a slow recovery of the US and UK banks,"he said, pointing out that foreign banks had accumulated "toxic assets"as a result of the global economic crisis and the liquidation process would take a long time.

"We will see commodity prices driven more by the economic fundamentals of supply and demand and less financial leverage, and we will see a more frugal US consumer, who has started to save in an environment of static wage growth,"he said.

He said while the frequency of financial failure was nothing new, the negative global growth and historic rising unemployment have resulted in a risk-averse global capital market.

Minister in the Ministry of Finance Mariano Browne said the country needed to develop strategies to prevent the reoccurrence of, or at least mitigate, the worst effects of the next financial crisis.
"Crises come in waves,"
he said.

Browne said while the decade started with many corporate failures around the world, this was the first time the crisis affected the banking centres in developing countries.

"Despite the tremendous efforts of improving accounting measurement techniques and the fairly detailed standards to deal with the plethora of new financial instruments, it lacked the predictive power and did not prepare the world for the fairly cataclysmic events that took place in most money markets," Browne said.