ECONOMIC OUTLOOK FORUM 2024
FEATURE ADDRESS by
Gregory Hill – Vice President, Finance & Corporate Services, Caribbean Development Bank
Good morning all. It is always and honour to be invited to address an AMCHAM audience. And this time, as keynote speaker, the pressure is on me to connect with you on some of the topics that have attracted my interest over the last couple of years. That is, finding the convergence between people, planet, purpose, and prosperity.
It has an even greater significance now, given my new role with the Caribbean Development Bank. You would be aware already, that as a sustainable development financier, the Bank is deeply embedded in major regional infrastructure developments, and building climate change resilience, among other urgent needs of its Borrowing Member Countries.
But first, let’s take stock of the dynamic global shifts that are also impacting every aspect of our lives.
I begin with a bold statement, one I’ve said before: the next 10 years will bring more change than the previous 100 years.
I repeat: The next 10 years will bring more change than the previous 100 years.
We are already seeing the start of these dynamic changes: renewable energy, quantum computing, nuclear fusion, open AI architecture, Chat GPT, machines behaving like humans, the healthcare revolution, how people work/communicate, and the geopolitics. But the next 10 years? We’re talking about a complete reboot.
I am sure that top of mind for most – if not every – business leader at this conference, is how we position ourselves to catch this new wave of commerce, and how we align our resources and strategies to keep our balance and ride it to the shore.
To continue the metaphor, in recognizing the significant opportunities for our regional economies, particularly Trinidad and Tobago, CDB can be the surfboard that carries our region forward, to capitalise on the many opportunities for expansion and advancement that are now opening up.
Right now, the world is in what is called the ‘5th Industrial Revolution’, which is all about deepening the integration between people, technology, and the environment. Compared to previous periods of technological expansion, it prioritises ensuring that productive gains, are balanced with care for the lives of people, greater inclusion of all, and the protection of the environment.
This is where I see the potential for CDB boosting T&T’s economy, based on providing the necessary policy support for pivoting, strengthening the knowledge culture, and investing – together with our global partners – for Trinidad and Tobago’s future well-being.
Let me share some live examples:
1. Investments in methanol fuel, one of Trinidad and Tobago's recognized products, will help to drive the transition away from fossil fuels.
2. The recent supply-shocks present an opportunity to utilize T&T’s geographic position for shipping and trans-shipment growth.
3. The rapid expansion of digital payments also offers opportunities for the country’s micro, small, and medium-sized enterprises, which account for a significant portion of GDP and employment.
4. The changing global marketplace allows T&T to pivot towards a more resilient, sustainable, and inclusive Trinidad and Tobago.
This also aligns with the policy mandate of CDB which is building resilient prosperity for all.
Trinidad and Tobago, with its high-income levels, universal access to basic services, strong regional and international connectivity, and a buoyant stock of foreign reserves, is well situated to build an even more prosperous economy in the coming years.
Ladies and gentlemen, we must however address a few challenges: structural deficiencies, timely response to economic disturbances, and the hurdles of global inequalities that hinder competitiveness and diversification. Likewise, rising costs, food and energy insecurity, and natural hazards, necessitate proactive measures to reduce vulnerabilities and increase resilience in Trinidad and Tobago and the rest of CDB’s Borrowing Member Countries.
The Central Bank of Trinidad and Tobago should be commended for managing the macroeconomic environment during the pandemic and post-pandemic with a steady hand, especially given the volatile markets, particularly in the US. Likewise, the Government should be acknowledged for skillfully negotiating new gas pricing regimes, stabilizing key industries, and commencing the execution of the Dragon gas field partnership with Venezuela. This milestone in particular protects T&T’s standard of living and enhances export potential. There is no hiding the dependence of the country’s economy on the energy sector; there is also no shying away from the fact that T&T needs to think beyond energy, to already productive areas such as services, manufacturing, and renewable energy generation.
I’m happy to say: clearly the doors aren’t closing … they’re opening for this diversification to become a reality for Trinidad and Tobago. The launch of the Phoenix Park Industrial Estate on January 10th is a powerful start to the new year.
This economic space adds to the manufacturing capabilities of the country and will help to further expand the 53% growth in exports witnessed between 2021 and 2022. T&T’s products are now available in 150 global markets. The country now has the opportunity to mitigate and learn from the important food security lessons post-pandemic. As such, the country is now seeing growing interest by individuals and small enterprises in permaculture and organic farming. In Tobago, the THA committed to investing $50M in farmland development in six areas designated for agriculture, among other initiatives to support this new thrust.
I note with interest the new regional ferry service between Guyana, T&T, and Barbados. This aligns with the fact that, in 2022, CDB announced it would finance the consultancy services for a study on the options available to establish a new shipping service across Barbados, Grenada, Guyana, and Trinidad and Tobago.
There is a nexus where the current and future growth strategies of T&TG intersect with the dynamic shifts taking place in the global economy. Within this context is another area of mutual benefit, where CDB can support the transition.
In this regard, a major shift of the Bank towards meeting the global, regional, and national targets, is the need for greater linkages between us in development, and those in the private sector. Our goals are united towards improving the economic, social, and environmental landscape and our vision is the same: a better Caribbean, a better Trinidad and Tobago for current and future generations.
As such, CDB recognizes the need to strengthen the Regional Financial Ecosystem through Resource Mobilisation from external funding sources, and from within the Region, also. This is much needed, as our countries do not have the fiscal space to finance economic growth alone, without incurring more debt.
For CDB to increase its average US$400 million per annum investments, and for the development ecosystem to crowd in financing to meet the estimated US$100 billion regional development envelope (in 10 years’ time), there needs to be a multi-source, multi-instrument approach under a Regional Coalition for Development. It is here that the private sector can play an instrumental role in increasing the equity available for development, by channeling available liquidity through transformational projects. This partnership or, what we could call, a 'Coalition for Development', represents a pivot towards a modern, people-centered, and environmentally-conscious state. Who better to drive it than all of you, captains of industry, bankers, and corporate leaders in this room?
This is a call to action to YOU.
Its success resides on four transformative actions:
1. Digital transformation;
2. Carbon decoupling;
3. Renewable energy; and
4. Mobilisation of private sector capital.
Last year I spoke at the FinTech Islands Conference, which really brought home the innovation in Digitization and Tech taking place in the Caribbean. At that event, I called for our Region to push its own digital agenda and become a Tech-centre for the Americas, taking our creative and innovative Caribbean minds and inter-lacing them with the technology which is becoming radically decentralized.
We have this tremendous opportunity to be part of a whole new economy that is digital and founded on sustainable development principles. T&T has an excellent foundation for digital transformation. The country has an educated workforce, advanced technological infrastructure, and a high mobile internet penetration rate. The country is focused on boosting productivity, implementing digital solutions, and growing the digital economy.
While digital transformation is crucial for improving efficiency and connectivity generally, it’s especially crucial for countries with aging populations like T&T’s. It helps increase productivity and maintain output despite a declining labour force. Note that the labour force has dropped below 600,000 individuals for the first time since 2004.
CDB has invested significantly in preparing for these paradigm shifts, by ensuring the readiness and capability of Borrowing Member Countries to participate in the 5th Industrial Revolution. We are ready to engage in a Region-wide programme to support the adoption of modern technologies Caribbean-wide.
America is now shifting to a ‘green economy’ and this requires a multi-trillion dollar investment. The International Renewable Energy Agency estimated a cumulative US$150 trillion is required to realise the 1.5°C target by 2050, averaging over US$5 trillion in annual terms. Because our region is so closely tied to the US, there are a lot of ripple effects for us, and a lot of opportunities to collaborate, also.
Likewise, for us in the Caribbean, our future will be redefined in the new context of what will happen in the world in a very short time, and how we can participate in it. The biggest change in the region – especially in T&T – will be the primary shift from the Fossil Fuel Economy to the Green Economy, and from Economy to Planet.
The growth of the country must be separated from the lifecycle of oil. It means decoupling the GDP from carbon. In 10-15-20 years that dependency could hamstring T&T. The country must tap into the other resources, and educate people to be part of mobilizing those resources. For example, we're going to see 100 million new jobs in the green economy in the next 20 years based on US forecasts. So there IS opportunity.
As the world is working towards meeting the Paris Agreement's global warming limit, and increasing climate adaptation ambition, carbon pricing mechanisms and the focus on carbon sequestration are vital for countries like Trinidad and Tobago, which may face penalties based on emissions per capita. Fossil carbon dioxide emissions in Trinidad and Tobago amounted to approximately 21.2 metric tons per person in 2022, a slight decrease in comparison to the previous year. But still noteworthy.
Middle Eastern countries are well on their way to choosing not one path, but many new paths. The UAE is transitioning and changing its economy rapidly. They are pivoting into education, innovation, and fintech. Ex-oil and gas staff are now getting skilled in digitization and green energy, battery storage, energy transmission, and the like.
CDB is ready to support Trinidad and Tobago’s part of this trillion-dollar educational and innovation transformation, right here, right now, so that T&T has a Future Fit Economy, designed to deal with long-term issues like climate change and the technology revolution.
Recently, CDB published ground-breaking research on Blue Carbon Accounting. This research, and other pieces of international investigations, are showing the potential of marine and coastal ecosystems to integrate within National Accounting frameworks, and potentially help our economies to engage in the international carbon market.
I’ve shared with you opportunities for T&T to pivot its economy towards a sustainable future. I’ve given you insights into where the private sector has to play a role. Now hear what the CDB and other development Banks have to do.
As you just heard, BlackRock estimates that a reform of public financial institutions could free up as much as $4 trillion to help emerging markets tackle the fallout of the climate crisis. Trinidad and Tobago has to decide what part of the multi-trillion USD sustainable economy it wants for itself. This audience has a voice!
The Government's National Energy Policy already recognizes the importance of renewable energy and energy efficiency. Fiscal support mechanisms, such as tax credits and import duty exemptions, are already in place to promote clean energy, and the CDB is also ready to finance this transition.
From its first Biennial Update Report to the UN Framework Convention on Climate Change, Trinidad and Tobago projects that by 2048, 10% of power generation will be from Renewables. This report cites T&T’s first taste of renewable energy from solar (BP/Shell) will come on-stream by 2030.
The timing is obviously perfect that, under a partnership to support sustainable and resilient projects, the CDB and IDB have researched the potential of Marine Renewable Energy technologies for the Caribbean, including Trinidad and Tobago. The study shows exciting potential, with the country's marine renewable energy resources estimated to be more than 30 times its average electrical demand.
There is also an opportunity for the country to be part of a wider regional grid through a Caribbean Grid-Interconnection concept. This could start in the Eastern Caribbean with a link to T&T, and it also could involve the development of geothermal energy and offshore wind sources.
In concluding, I spoke of the challenge in accessing capital and in allocating resources. I spoke of the need for a transformational agenda. Who will take the really big steps? Is it private sector? Is it private equity capital? Is it sovereign funds stepping in? Is it development agencies like CDB? Are there joint ventures to be made? Who are the architects of the transition?
I would say that it’s all of us, building the ladders to connect, and to reach the next level, and the next, and the next higher level. This is a true ‘Coalition for Development’, and I challenge you all to be a part of it.
A good future for the country, is one that harnesses the thought leadership from each and every one of you here today, to navigate the economic transformation which is just within reach.
I’ve shared quite a bit, and I appreciate your kind attention. We should be excited by the immense potential of Trinidad and Tobago, to chart its renewed development path, building on its many strengths and harnessing the potential of the changing global economy. CDB is already advancing actions aimed at creating opportunities and strengthening allegiances to help diminish the Region’s vulnerabilities and reinforce our collective ambitions to propel the economy…forward.
I leave you with a quote from futurist Buckminster Fuller. “We are to be the architects of the future, not its victims.”
Thank you for listening.