to wait and see whether this historic power shift is temporary or permanent. now what is the state of the economy of trinidad and tobago? as indicated in the overview, which we handed out this morning, so far, the contagion is coming largely through the sharp decline in oil and gas prices and falling demand for our energy - based products – iron and steel and petro - chemicals. • the central bank ’ s projection is for a slowing of real gdp growth to 3. 5 per cent in 2008, down from 5. 5 per cent in 2007. most of the slowdown is coming from the energy sector. • as the non - energy sector continues to do relatively well, unemployment remains low at 4. 6 per cent with persistent labour shortages, mainly in construction and manufacturing. • since the last mpr in april, headline inflation has accelerated, from 9. 3 per cent ( year - on - year ) to 14. 8 per cent in september. food inflation has risen from an already high 20 per cent to a mind - boggling 35 per cent in september. ( if we are looking for some comfort, the last data we have has food inflation at 16 per cent in barbados and 34 per cent in jamaica and suriname ). • core inflation i. e. excluding food has risen from around 4 per cent as at end - 2007 to 6. 2 per cent in september 2008. ( for us, at the bank, core inflation is a good measure of underlying inflationary pressures – and we would like to see it at around 2 - 3 per cent ). • not surprisingly, the report identifies the main drivers of inflation as : ( i ) the record rise in international food prices that shocked the entire world from around the second half of last year, through mid - 2008 ( and you know all the reasons ; high oil prices, the diversion of agricultural lands to ethanol, climate change etc ). ( ii ) insufficiency of domestic agricultural production ( and persistent crop damage resulting from floods ). ( iii ) our expansionary fiscal stance as we seek to pursue rapid development and to relieve the constraints being posed by declining spare capacity ( iv ) rapid bank credit expansion, fuelled by buoyant liquidity conditions ; and ( v ) high inflation expectations ( which has become a major issue ). in terms of policy responses, during the fiscal year ended september 2008, while fiscal policy may have resulted in a larger overall surplus, permitting an increase in transfers to the hsf,

and access to credit remained restricted for many potential borrowers. consumer sentiment, which dropped sharply last summer, has since rebounded but remains relatively low. in the housing sector, affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages. unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans ; data for the fourth quarter of 2011 from the national income and product accounts reflect the advance estimate released on january 27, 2012. in january, 5 - 1 / 2 million persons among those counted as unemployed – about 43 percent of the total – had been out of work for more than six months, and 8 - 1 / 4 million persons were working part time for economic reasons. bis central bankers ’ speeches others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices. on the supply side of the market, about 30 percent of recent home sales have consisted of foreclosed or distressed properties, and home vacancy rates remain high, putting downward pressure on house prices. more - positive signs include a pickup in construction in the multifamily sector and recent increases in homebuilder sentiment. manufacturing production has increased 15 percent since the trough of the recession and has posted solid gains since the middle of last year, supported by the recovery in motor vehicle supply chains and ongoing increases in business investment and exports. real business spending for equipment and software rose at an annual rate of about 12 percent over the second half of 2011, a bit faster than in the first half of the year. but real export growth, while remaining solid, slowed somewhat over the same period as foreign economic activity decelerated, particularly in europe. the members of the board and the presidents of the federal reserve banks recently projected that economic activity in 2012 will expand at or somewhat above the pace registered in the second half of last year. specifically, their projections for growth in real gdp this year, provided in conjunction with the january meeting of the federal open market committee ( fomc ), have a central tendency of 2. 2 to 2. 7 percent. 3 these forecasts were considerably lower than the projections they made last june. 4 a number of factors have played a role in this reassessment. first, the annual revisions to the national income and product accounts released last summer indicated that the recovery had been somewhat slower than previously estimated. in addition, fiscal and financial strains in