ewart s williams : economic outlook 2011 address by mr ewart s williams, governor of the central bank of trinidad and tobago, on the occasion of a panel discussion at the trinidad and tobago chamber of industry and commerce, port - of - spain, 14 january 2011. * * * salutations : the honourable stephen cadiz members of the head table distinguished ladies and gentlemen first, thanks for the invitation. 1. before talking about the 2011 outlook, a brief word on 2010. notwithstanding a slight pick - up in the last quarter, for the year as a whole the preliminary data shows that the economy was flat – no growth. this follows a decline of some 3 per cent in 2009. what this means is that while many economies recovered from the global recession of 2008 – 2009, the caribbean, including trinidad and tobago was not so fortunate. 2. the energy sector continued to register positive growth but activity in the nonenergy sector declined for the second consecutive year. for the period 2009 – 2010, activity in the non - energy sector declined by a cumulative 10 per cent. now, the non - energy sector accounts for 97 per cent of total employment. if these estimates are correct, therefore, it is more than likely that there is a significant increase in unemployment. 3. the economy and the population cannot afford a third year of economic stagnation and therefore, in my brief statement, i have opted not to present a passive analytical outlook but to identify the many positive characteristics that we could exploit to ensure that we break the current economic malaise. 4. it is now generally accepted that the global recovery in 2011 will be stronger than last year. this is good news for our energy sector which could expect an increase in demand and in prices for oil and petro - chemicals, in particular. the outlook with respect to gas is less clear – although gas prices faced a sudden jump recently. unfortunately, the short term outlook is for continued reduction of oil production which has now fallen below 100, 000 barrels per day. there is, however, scope for some growth in petro - chemical output following the addition of new productive capacity. we therefore project that energy sector value added would increase by 3. 2 per cent in 2011, slightly more than last year. 5. as noted above, a recovery in the non - energy sector is urgently needed ; and while any pick - up in regional demand will help, that is not assured, the jolt must come from domestic demand. in my view, many of

##r / crd4 ). where the primary responsibility for national macroprudential policy rests with the designated national authorities, the ssm regulation allows the ecb to call for stricter national measures based on its own independent analysis. as with micro - prudential supervision, the benefit of ecb ’ s oversight role is not only in the enhanced credibility, but also in the broader cross - country perspective inherent in the ssm ’ s decision - making. this helps ensure that macroprudential policies are implemented in a consistent manner, thereby safeguarding the integrity of the eu ’ s single rule - book. at the same time, the additional oversight by the ecb limits the risk of the so - called inaction bias to ensure that systemic risks, where identified, are addressed in a timely fashion. furthermore, the macro - prudential tools allow targeted attenuation of national credit cycles, thereby also limiting heterogeneity in economic cycles within the euro area. this, in turn, helps support more balanced growth in the region and helps monetary policy to remain focused on the euro area aggregates. finally, let me admit that i have mainly focused on the banking union ’ s impact largely from the perspective of a euro - area member state. the benefits of financial stability in the euro area will certainly be felt also outside its borders, but the overall balance of the banking union ’ s costs and benefits may differ between its members and non - members. and having the banking supervisory and resolution regime fully effective only in the euroarea – at least in the very beginning – would mean that the institutional arrangements do not fully correspond to the reality that banks can operate across national borders in europe. the banking union is open to members outside the euro area, but so far none have opted to join in. should this remain so, the borders of the banking union would slice across our current, closely integrated financial markets in the nordic countries. this raises the question how this level of financial integration can be sustained if the institutional supervisory and crisis resolution arrangements remain separate? although our current institutional set - up may not be optimal, we also have in the nordic region long traditions of cooperation in financial supervision. if anything, the banking union should give us incentives to strengthen this cooperation and find collaborative working arrangements that help us to make the most of the banking union ’ s benefits also at its borders. the fact that most of us share the same eu - wide regulatory rule book ( crr / crd