Continually subdued commodity prices and a humanitarian crisis in neighbouring Venezuela are two of a multitude of challenging external factors affecting the Trinbagonian economy in 2020. As the twin island nation exits recession, business leaders answering OBG’s latest CEO survey have reflected on some of the key issues affecting the country’s current economic trajectory.
With elections approaching in 2020, the business community has underscored a number of key priorities for any government managing the economy during the first half of the next decade. As such, our latest CEO survey delves deeper into some of the more existential and structural issues facing the
country, from climate change to crime.
In spite of the global economic challenges, such as unremarkable energy prices and an ongoing US-China trade war, two-thirds of CEOs remain notably positive about the country’s economic prospects, citing that they are either likely or very likely to make a significant capital investment in the country in the next 12 months.
While this figure is similar to the 2018 CEO survey result, the number of respondents that say they are either unlikely or very unlikely to invest dropped from 34% in that survey to 26%, with more respondents answering either neutral or do not know or N/A now than in 2018. This represents a marginal shift from negativity to uncertainty, potentially reflecting the unchartered nature of business in the year ahead, particularly as the upcoming 2020 elections approach.
Skills in need in the local labour market
According to the World Bank, the link between the skill set of a workforce and a country’s prosperity is intrinsic. Business leaders in our latest survey were remarkably decisive about those that are most necessary for the country’s economic development. Leadership was the most popular response, selected by 43% of respondents.
In CEO surveys conducted in other countries in the Americas, such as Mexico, the choice of leadership for this question has arguably reflected business leaders’ emphasis on the need for a clear and coherent policy direction during times of economic headwinds. Notably, nearly double the number of respondents chose leadership than the next most popular option, customer service, which received 24% of the total responses. This likely reflects the business community’s desire for rapid progress on the two issues that have remained the most prominent in our analysis since the start of our CEO survey research in Trinidad and Tobago. There is anecdotal evidence from our on-the-ground research, however, that the arrival of Venezuelans into T&T has positively affected both the customer service environment and the broader economy.
How the effects of climate change are affecting business
As a small island nation within the tropics, T&T is a country with a heightened vulnerability to climate change. In the question about climate change, 60% of respondents said that the agricultural sector was most vulnerable to shifting climate patterns. This is unsurprising given its reliance on regular rainfall patterns for crop planning and maintaining high production yields.
More crucially, if T&T is going to continue to leverage its agricultural production as a key component of its diversification strategy, then it may require further climate mitigation policies to both safeguard and bolster production levels.
Challenges and opportunities in 2020
In terms of government policy post-elections, business leaders agree that the dual priorities for the 2020 government should be both to tackle crime (37%) and diversify the economy away from dependence on oil and natural gas (39%). While the majority of the country’s GDP is now derived from non-energy sources, the continually subdued global energy prices make the need for further diversification ongoing.
Crime is also an ongoing concern for business leaders and many others in T&T because of the related indirect costs such as security – both physical and cyber – and the insurance protection that is needed to recover any losses from crime-related activities. In addition, it is a noticeable metric in global surveys or indices measuring competitiveness or ease of doing business. Therefore, a poor performance on this front could have wide-ranging implications for the country’s attractiveness as an investment destination.
In spite of the multitude of global challenges, as well as the need to tackle ongoing domestic issues such as crime and diversification, the noticeable optimism of business leaders across the country could signal the start of a much-needed shift away from heavily public sector-managed policies towards a more private sector-led market in the next decade, regardless of the outcome of the upcoming 2020 election.