The Construction Industry In The Economy Of Trinidad & Tobago Dr Timothy Michael Lewis Dept.

of Civil Engineering, The University of the West Indies, St Augustine, Trinidad & Tobago. tmlewis@eng.uwi.tt Abstract: The construction sector is generally one of the larger and more important sectors of a nations economy. If economic policy is achieve its desired objectives it is necessary to have some understanding of how the economy will react to various changes that can be effected. Because the construction sector is large and responsive it is a key sector for manipulating the economy, and hence it is important to know what the role of the construction sector is in the economy. Some of the key issues here are the effect of changes in GDP on construction output and employment, as well as the effects of changes in money supply, inflation, expenditure on the public sector investment programme and the rate of approval of building plans. This paper sets out to see if there are relationships between these factors that justify further investigation, and as such helps establish a research agenda for the industry, particularly in comparing developed and less-developed countries..

Keywords: Trinidad & Tobago; GDP; employment; inflation; public sector investment programme

Introduction The performance of the national economy depends upon the effectiveness of national economic policy. This in turn depends upon the ability to forecast what will happen as a result of various different prescriptions. One of the most dynamic and responsive industrial sectors is that of construction. It is also an industry in which the output is normally highly visible, which gives it political appeal, as well as having strong backward and forward linkages with other industries, which makes it a powerful tool for economic manipulation. Clearly, it is therefore, important to know how the construction sector responds to changes in other aspects of the economy, particularly those that are relatively easy to regulate. Public sector demand lies in this category, and it often represents a very significant proportion of the total demand on the construction industry, particularly in Developing Countries. Similarly, construction is usually one of the major sources of employment in an economy, and so policy decisions on the construction sector not only have an important affect the performance of the economy but also on the levels of employment. For all of these reasons it is important to try to improve our understanding of the way in which the construction industry relates to other sectors of the economy, and to changes in the national economy itself. Previous studies have found there to be a strong positive relationship between construction output and economic growth, particularly in developing countries (Turin, 1969), though this work is in need of updating. It is consequently of interest to establish a research agenda to identify areas in which research could beneficially be directed1. To help define a research agenda, this paper looks at some of the relationships between the different parameters that are used to
This work is intended to complement the work done by Wells (Wells, 1999) on low-income countries in Africa.
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define the construction industry, in order to see if any specific relationship is apparent. The parameters chosen were those that seemed likely to indicate a direct relationship with the output of the construction sector The absolute values used to construct the tables and figure were obtained from the published national statistics from the Central Statistical Office (CSO) in Trinidad & Tobago (T&T)2. Unfortunately, this Office has suffered from a number of disruptions, and as a result some of the data streams are incomplete, and some of them have changed3. Writing about the published statistics, Francis (1997) notes, ..research on the Construction sector revealed the fragmented nature of the database4, but her call for modernisation and rationalisation of that database fell on deaf ears. However, by compiling data from a number of different sources, and applying appropriate multipliers where necessary, it was possible to link different series of data and obtain reasonably complete sets of data for the purposes of this study5. It should be noted that all sets of economic statistics suffer from these same problems to greater or lesser extents. The statistics for the UK, for example have gone through a number of revisions in recent times to accommodate the need for consistency in the European Union. Changes to the Index of Consumer Prices, for example occurred in 1997 when a Harmonised Index was

In the Figures that follow, the absolute values on the y-axes should not always be taken at face value, because in some instances they have been adjusted so that the curves come together on a similar portion of the graph. The figures have not been distorted by this adjustment, only moved vertically so that their shapes can be compared directly. The reason for this is that the focus of interest here is not the absolute values so much as the shape of the curves and their trends. 3 E.g. the index of retail prices in use since 1982 was restructured in 1993 4 An earlier attempt to construct an input-output table for the construction industry (Lewis, 1981), based on published data, highlighted these same problems of continuity and consistency 5 In the Figures that follow, the absolute values on the y-axes cannot always be taken at face value, because in some instances the curves have been moved so as to appear together on a similar portion of the graph. The shapes of the curves have not been distorted by this adjustment. The reason for this is that the focus of interest here is not the absolute values so much as the shape of the curves and their trends.

launched (Office of National Statistics, 2002). All values are expressed in Trinidad and Tobago dollars with an approximate exchange rate of TT$6.3 = US$1 as at March 2003. Trinidad and Tobago Trinidad and Tobago is roughly the same size as Northern Ireland, both in terms of land area and population size. The World Bank Development Report (World Bank, 2003), classifies T&T as a Less Indebted Middle Income country. Table 1 gives a brief description of the economy of T&T in statistical terms. The Gross Domestic Product (GDP) of T&T in 2001 was just under US$9 billion. The petroleum sector of the economy contributes roughly 20% of the GDP (IMF, 1999) and consequently its fluctuations have a significant impact on the economy. The construction sector in T&T traditionally contributes just under 10% of GDP, though in 2001 this was down to just over 8% not because the industry declined, but that oil and gas revenues increased significantly. The economy has been growing relatively rapidly in recent times with real GDP increasing on average at a little over 4% per annum. This growth has been occurring on top of an inflation rate that has been running at around 4.4%. (Table 1 here) Despite relatively high rates of economic growth and inflation there has been a persistently high level of unemployment. This has not fallen below 10% since 1982, and for most of the late 1980s and early 1990s it was over 20%. It has been suggested that this unusual persistence of unemployment was caused by a decline in the countrys capital stock following a period of low saving and investment (Braumann, 1997), which occurred despite a bubble in real wages that peaked in the mid-1980s. Although Braumann does not identify it, there was also a significant flight of capital from T&T

during this period, because of uncertainty over the exchange rate, and fears of devaluation, thus removing money from the system for both savings and investment. Arthur Okun suggested that a measure of economic discomfort (Lovell and Tien, 1999) could be derived by adding the annual unemployment rate to the inflation rate the higher this Index of Misery, the greater the social discomfort. Table 2 shows a comparison of the Misery Index numbers for the ten years from 1993. It will be seen that this index for T&T has been hovering around 16% since 1999. This compares with an average figure of around 10% for the USA economy over the past fifty years, and a current figure in 2002 of 7.4 for the USA, 6.9 for the UK and 10.5 for the European Union (EU). The figures for T&T are consistently higher than those for the other (moredeveloped) countries and the EU. This is indicative of the relative hardships faced by the majority of the population in a developing country, where they either suffer from high unemployment or high inflation or both what is popularly known as a double whammy. Indices of wages and prices Figure 1 shows a comparison of the index of wages in the construction industry with that for all industries for the period 1975 to 2000. It will be seen from the curves that there was a period of sustained and significant growth until around 1986, and thereafter a slowing down, and in some years a decline in wages. The boom period prior to 1986 resulted from the fact that Trinidad & Tobago (T&T) is an oil exporting country, and the oil shocks of the mid 1970s and early 1980s provided a welcome boost rather than a setback to the economy. It should be noted that the benefits of this were offset by

powerful unions forcing wages up which helped to fuel inflation, increase government recurrent expenditures, and push unemployment up. By comparison, the period after 1986 was one of hardship in T&T, with the economy slipping into recession in the wake of the international recession, and finding itself additionally burdened by very high levels of international debt following gratuitous overspending by the government in previous years6. These two factors forced the government to accept an IMF imposed structural adjustment programme in order to access additional international funding largely to service its debt. This programme involved the normal IMF medicine of a cut back in the public sector, privatization of public assets, liberalization of trade and floating the currency. As has so often been the case, this medicine was as bad as, if not worse than the illness. Its implementation provoked social unrest that climaxed in an attempted coup by a group of disenchanted Muslims. After a period of violence, they were captured and the coup ended, although an extended curfew continued for several months. Despite the hardships that it had suffered, the government was blamed for the harsh economic prescriptions of the IMF, and it was soundly beaten at the following election in 1991. By the mid 1990s the economy was on an upturn as the price of oil rose, and there was a general return of economic optimism in the world economy, and this was reflected in the rising levels of wages in the economy. As will be seen in Figure 1 and Figure 2, both the indices for the construction sector (minimum wages and building material prices) fall below the industry averages for most of the period since the mid 1980s. It is suggested that the cost of building materials

The Prime Minister became famous for his statement that Money is not a problem as his government indulged in a spending spree.

leveled off so significantly after 1990 because of the effects of the attempted coup and the ongoing curfew which seriously restricted the operations of the construction sector. These prices only began to rise again, but still more slowly than retail prices, after 1993, as investment in real property picked up again with the restoration of stability and confidence in the economy. The shape of the curves in Figures 1 and 2, show that costs in construction have lagged behind retail prices and wages in other industries, and consequently that the prime cost of construction should have been rising relatively slowly. Provided the industry maintained its overheads and profit levels in proportion to its costs, then the prices of construction output should have been rising more slowly than prices in the rest of the economy7. This should mean that the client would be getting better value for money from a $ spent on construction than for a $ spent on other consumer goods, provided that construction productivity levels have been maintained. Assuming that consumers would be aware of this enhanced value, it should boost the demand for construction. A key assumption here is that construction productivity levels have been maintained, and this can be examined by looking at the gross domestic product (i.e. the total output) per capita for the construction industry as compared with workers in other industries. The GDP and construction output per capita Figure 3 shows the variations of the GDP per capita of the national workforce with the construction industry output per capita of the construction industry workforce in current dollar terms. The curves suggest that the construction industry has increased its

Unfortunately there are no published statistics on the cost of construction output, or how this has changed over time, however, anecdotal evidence would suggest that construction prices have been rising at least as rapidly as other prices in the economy.

productivity levels fairly consistently relative to the rest of the economy since the late 1980s. This suggests that construction workers are producing more value, on average, than other workers in the economy. This is surprising when set against the fact that the increases in their wages over this period have been lower than the average for other industries so it is not a wage effect being passed on. This can be explained in several ways. Firstly it may be that the workers are working harder or smarter, and thus producing more. Secondly it may be that the industry is relatively more capitalised than it used to be, and this enables the workers to be more productive. Thirdly it may simply be that the prices charged for construction output have risen faster than prices elsewhere in the economy so that the same level of output per worker is now attracting a higher return. Fourthly, it may be a result of the tendency of the construction workforce to vary significantly over time, and to vary much more than the national workforce. It is characteristic that when construction workers cannot find work in the industry, they take on other, temporary jobs as vendors, taxi drivers or security officers for example. They thus disappear from the construction workforce statistics, and consequently raise the apparent per capita output. It is also possible that more than one of these factors is in play. There is no doubt that the industry is more capitalised now than ever in the past, though this is principally in the form of hand power-tools. The workers are also more skilled on average than in the past, if only simply through exposure and learning-bydoing. And, in addition the prices of real property have been rising faster than other prices in the economy which may be an indication that the price of construction itself has been going up (though it may equally be the effect of a limited supply and a steady demand for property).

The fact appears to be that building prices have outstripped any increases in costs, produced by the (relatively low) inflation rates of labour and material prices in the industry. Unfortunately there are no recorded figures of the price per square foot (or metre) of newly constructed buildings, but anecdotal evidence is that during the mid1990s to present there has been a significant boom in building work, to such an extend that most reputable contractors are overworked (Lewis and Mugishagwe, 1996). This has pushed up the prices they charge, as economic theory would predict. A study of homeownership as an investment carried out by the Central Bank reported that between 1972 and 1993 the trend is prices was as shown in Table 2. As will be seen, during the boom years of the early 1980s costs/prices skyrocketed, then fell dramatically with the recession of the late 1980s, early 1990s, before climbing again as the economy picked up in the mid 1990s. This trend will have continued into the early 2000s, with only a slight dip during the international recession, as the economy of T&T was protected by the high oil and gas prices, and the income that they produced for the economy. Average figures are not available for recent times, but a typical middle class/middle income 3-bedroom house would now (in 2003) cost around $500,000 (US$ 80,000) to build. (Table 2 here) One of the principle factors affecting the performance of the industry is the status of demand, and in a Developing Country (DC) like Trinidad & Tobago, the public sector is normally one of the major clients for construction. The public sector demand will normally be spread over a range of ministries, but one major element will usually be the Public Sector Investment Programme (PSIP). The PSIP normally pulls together the

major capital projects that the government plans to introduce, and as such forms a major element of fixed capital formation. The GDP, PSIP and construction output It will be apparent in Figure 4 how closely the GDP (divided by a factor of ten) matches the shape of the construction industry output, but that construction tends to exaggerate the highs and lows of the GDP. There is, however, no apparent lag between the peaks and troughs in construction output and those of the economy at large. This means that there is a very rapid response of the industry to changes in the economy, and this is probably due to the impact of the public sector procurement which itself reacts very rapidly to political perceptions of the state of the nations economy. This responsiveness may be compared with a 9 month lag in Turkey (Birgonul & Ozdogan, 1999) and average of between 2 and 3 quarters in Australia (De Valence, 1999), suggesting those countries either have more stable politicians or that the public sector has less impact on the industry demand. In general, however, it is clear, that when the national economy does well, the construction industry does even better, and when the economy slumps, so does construction, only more so8. It is clear that these levels of performance are related, although it is not clear which is the causal factor does construction boost the economy or the economy boost construction? It was felt at the time that the construction industry was the prime mover, and that it could, and should be used to kickstart the economy. The belief that public sector expenditure on construction could be used to turn around the economic recession
The state of the industry prior to 1990 was the subject of a number of studies (Lewis 1982), (Lewis 1984), (Osborne, 1984), (Suite, 1984) because of concern about its performance. This was of particular concern because, although output appeared high, a large and increasing proportion was attributable to foreign firms, and the local industry was very concerned.
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as well as provide valuable capital assets was in line with the Keynesian prescription and was the basis of a national consultation in the early 1990s (Construction Industry Committee, 1992). Figure 4 also shows the expenditure on the Public Sector Investment Programme (PSIP). It can be seen that the output of the industry corresponds quite closely with expenditure on the PSIP. The fact that the PSIP exceeds the output of the industry between 1982 and 1985, can be explained by the presence of foreign firms and the share of public sector work they were granted during this period under the notorious government-to-government arrangements established by Dr Eric Williams, the Prime Minister at that time (Lewis, 1984). There appear to be variable lead and lag times between changes in the economy and the PSIP, as well as between the PSIP and the construction industry output. This is understandable as the political response to an economic setback would be relatively slow at first, as projects initiated under the PSIP would be continued, and future plans just slowed down until it was clear whether or not the setback represented a short term adjustment or the start of a recession. Similarly, the political directorate would be slow to initiate new projects when a recovery begins partly because of the lead time for planning and mobilising new projects and partly from the uncertainty over whether or not the recovery has really started. The curves also support the Keynesian view that the engineering industries tend to exaggerate the fluctuations of the economy as a whole (through the multiplier effect), as the curve representing the output of the construction industry follows the same shape as that of the GDP, but has higher peaks and lower troughs. This same pattern is

demonstrated in other countries, such as Turkey (Birgonul & Ozdogan, 1999) for example. Construction labour force and employment Figure 5 shows the size of the construction labour force i.e. all those who claim to be construction workers whether employed or not - and the level of employment of that labour force in the industry, in relation to the economic performance of the construction sector. It can be seen that the size of the labour force and employment vary significantly over time, and that they tend to vary in the same way. When the economy is booming the labour force grows and employment in the industry grows. As the business cycle takes a downward turn, the workforce contracts and employment in the industry contracts. These movements are exactly what logic would predict especially in an industry with high levels of temporary and part-time employment. (Figure 5 here) As is normal in a Developing Country that is converting from a largely agricultural base to a more industrialized economy, unemployment is a significant problem in Trinidad & Tobago. The construction industry plays an important role in helping to absorb some of the surplus labour that has been displaced from its traditional agricultural pursuits. However, this reserve army of labour is not considered as a part of the construction labour force. They come and go, and their designation is that of the last job they held. In more developed economies one would normally expect the labour force to be relatively stable in size and for employment levels to vary with business cycles. The workers who are considered to belong to the construction industry would continue to be

identified with that industry even if temporarily unemployed. In Trinidad & Tobago, as in many other Developing Countries, that link very often ceases to exist when the workers are laid off from construction, as they move relatively easily into work in subsistence farming, driving taxi, street vending or doing some other kind of temporary sales, delivery or security service work. The temporary nature of employment in construction has been described as a casualization of the labour force by Wells (2001) and Standing and Tokman (1991) for example. When the workers are no longer part of the official construction labour force, this falls as a result as happens during a recession. However, these workers retain links with the industry and are almost immediately readily available for construction work once demand picks up again. This explains why the size of the total labour force varies so significantly so quickly (e.g. declining by over 40% between 1985 and 1990) - as workers move from one form of employment to another with changes in demand. The output level for the construction industry is, however, significantly more volatile than the figures for employment or the size of the labour force, suggesting that there is a buffer level of employment that can expand or contract output depending on demand. It should be noted that there are lower and upper bounds on both the labour force and employment in construction. These would seem to represent the stable, relatively-skilled workforce at the lower end that maintains its employment even during a fairly prolonged recession (e.g. between 1983 and 1993), and at the upper end, those who have basic construction skills and can easily and quickly be drawn into the industry when the economy is more buoyant.

Construction output and the money supply Figure 6 shows the variations of the output of the construction sector and the M19 money supply. It will be noted that before 1986 the output of construction was higher in value than the money supply. This is not a problem because of the circulation of money i.e. the same money is spent several times during a year in circulation. (Figure 6 here) The similarity of the shapes of the curves demonstrates that the output of the industry bears a close association with the amount of cash available. In T&T much of the industry works on a cash basis, and particularly the smaller firms. It is recognised that the amount of money in circulation must be controlled in order to avoid inflation particularly where productivity is not increasing. However, the strong similarity between these curves does suggest that in a Developing Country (DC) where cash transactions rule, the share of GDP produced by the construction industry is controlled by the money supply. Further research is required in this area to establish whether or not there is a formal relationship across a range of DCs. The other factors that may be expected to affect the output of the construction industry is the cost of money i.e. the interest rate and the expectations of future trends in inflation and interest rates. It is difficult to measure future expectations, but these two factors (current interest rates and future expectations) together largely control the willingness of the industry to borrow money.

The M1 is the most liquid measure of the money supply as it includes only the currency in active circulation plus the money in demand deposits.

Loans to construction and building plans approved Figure 7 shows the level of loans to the construction industry as well as the output of the industry (in current $ terms), and the number of building plans approved. The absolute values of the commercial banks term loan interest rates are shown in Table 4. As is apparent, the interest rates have remained relatively high right through until the early 2000s, though they have now started to fall, and a current rate would be around 8.5%. Despite the high interest rates, the industry maintained quite a high level of demand for loans throughout the 1980s. This was because a shortage of housing and quality office space, that created a ready demand for constructed facilities, and this demand allowed prices to be increased to cover all costs related to project development including overheads like financing charges. (Figure 7 here) Figure 7 also shows the number of building plans approved. This is much the same shape as the curve for loans to the construction industry, but displaced from that curve. In time of economic growth the approval of plans precedes implementation as measured by loans to the industry, while in times of recession planning lags behind loan-based implementation, with the peak lag being around five years. This would seem to suggest a rather long gestation period between the formulation and approval of plans and the act of borrowing money to implement those plans. This is rather longer than would have been anticipated from experience in the industry, where the lag is more typically around one to two years, even in times of recession. There is no necessary relationship between the number of plans and the size of proposed structure, so it is possible that the lag

between approvals and loans is more a characteristic of rising prices and larger structures than simply the number of plans approved. The figure also shows that the output of the construction industry has a similar shape to the other two curves, and that it appears to be displaced by about half the time lag between the other two. In other words, the output of the industry lags behind the approval of building plans by roughly three years during boom times when the economy is growing, and lags behind plan approval by around a year during a recession. The loans to construction are loans to the industry not mortgage loans to the general public. Conclusion It is important in public policy terms that the responsiveness of the construction industry to other factors in the economy is known. If it could be established that a change of x% in the money supply would cause a change of y% in the share of GDP produced by the construction industry, and that this would boost overall GDP by z%, it would enable the government to indirectly affect that most critical of parameters. The curves presented here seem to suggest that there are direct relationships between the various factors - such as between the money supply and construction output, as well as between the size of the output of the construction industry and the national economy. Similarly, interesting relationships appear to exist between plan approval, loans to construction and the output of the industry. Further work is needed to establish values for these relationships, and testing them against various time spans in the database, in order to allow political intervention when there are periods of recession. There are also interesting comparisons to be made between the responses of the industry in Developing Countries as compared with the More Developed Countries. These further studies were beyond the scope of the

present paper, which was designed to examine various economic factors and see if there were likely to be relationships between them worthy of further investigation. There are. References Annual Review of Statistics, Central Statistical Office, Port-of-Spain, Trinidad 19782001 Birgonul, M.T. & I. Ozdogan (1999) Government effects of the Turkish Construction Industry, in Ruddock, L. (Ed.) Macroeconomic Issues, Models and Methodologies for the Construction Sector, CIB Publication No. 240, Rotterdam, The Netherlands. Central Bank of Trinidad & Tobago (2001), Annual Economic Survey 2001, Central Bank of Trinidad & Tobago, PO Box 1250, Port of Spain also including previous editions identified by year. Construction Industry Committee (1992) Report on Projects Recommended for Implementation in the Construction Industry, National Symposium on Employment and Job Creation, Chaguaramas Convention Centre, Trinidad & Tobago. Francis, Michelle (1997), Developments In The Construction Sector Of Trinidad And Tobago: Outlook For The 1990s, Quarterly Economic Bulletin Volume xxii No. 3, Central Bank Of Trinidad And Tobago, Port of Spain Braumann, Benedikt (1997), Unemployment Persistence and Capital Shortage: The case of Trinidad and Tobago, IMF Working Paper WP/97/77, Washington. International Monetary Fund (1999), Trinidad and Tobago: Selected Issues and Statistical Appendix, Staff Country Report No. 99/67, Washington. Lewis, T. M. and C. A. C. Imbert (2002), Caricom Construction and Installation Services Sector Elements for Competitive Strategies. Caricom Regional Negotiating Machinery (CRNM), Devon House, Kingston, Jamaica. Lewis, T.M. & D. Mugishagwe (1996), Operational Problems Facing a Sample of Construction Firms in Trinidad & Tobago, with, Proc. 8th International Symposium, CIB W-65, Scotland Lewis, T.M. (1981) Input-output analysis of the construction industry in Trinidad & Tobago, Proc. 3rd International Symposium, CIB W-65, Organisation and Management of Construction Volume 2, C2, Dublin (p135-151)

Lewis, T.M. (1982), Engineering productivity in a developing country, Proc. CIB W65 Mini-Symposium - Problems of Organisation and Management of Construction in Developing Countries and International Contracting, Istanbul, Turkey Lewis, T.M. (1984), A review of the causes of recent problems in the construction industry of Trinidad & Tobago, Construction Management & Economics, Vol. 2, (p3748). Lovell, Michael C. and Pao Lin Tien (1999), Economic Discomfort and Consumer Sentiment, at http://mlovell.web.wesleyan.edu/consent7b-99.pdf Office of National Statistics, (2002) Measuring Inflation, accessed 27 June 2003 at http://www.statistics.gov.uk/CCI/nugget.asp?ID=180&Pos=3&ColRank=1&Rank=160 Osborne, R.W.A. (1984), An Overview of the Impact of the Oil Boom on the Construction Industry of Trinidad and Tobago, West Indies during the period 1974-1982. Organizing and Managing Construction, Proceedings CIB-W65 4th Int. Symp., Waterloo, (Ed. V.Handa) pp 803-812 Standing, G. and V. Tokman (1991) Towards Structural Adjustment - Labour Market Issues in Structural Adjustment, International Labour Organization, Geneva Suite, W.H.E. (1984), The Role of the Construction Sector in Economic Planning and Development in a Developing Country Organizing and Managing Construction, Proceedings CIB-W65 4th Int. Symp., Waterloo, (Ed. V.Handa) pp 873-882 Turin, D.A. (1969), The construction industry: Its economic significance and its role in development, UNIDO Monograph on Industrial Development Number 2, UNIDO, Vienna, mentioned in (Wells, 1999) Valence, G. De (1999), Recalculation of Australian Construction Productivity Using Construction Industry Survey Data, in Ruddock, L. (Ed.) Macroeconomic Issues, Models and Methodologies for the Construction Sector, CIB Publication No. 240, Rotterdam, The Netherlands Wells, Jill (2001), Construction and capital formation in less developed economies: unravelling the informal sector in an African city, Construction Management and Economics, 19, 267-274 Wells, Jill (1999), The Construction Industry In Low Income Countries: An Agenda For Research, Construction Industry Development In The New Millennium Proceedings,

1st Conference of CIB TG 29 on Construction in Developing Countries, Singapore, http://buildnet.csir.co.za/cdcproc/docs/1st/wells_j.pdf World Bank (2003) Global development finance : striving for stability in development finance, Report No 25900, available at http://wwwwds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000094946_030515 04051564

Table 1. Selected Economic Indicators for Trinidad & Tobago: 1997 - 2001 Item Changes in real GDP (1985=100) Construction share of GDP (US$Mn) Inflation rate (%) Unemployment rate (%) Source: (Central Bank of T&T, 2001) Table 2: Comparison of the Index of Misery values Year US Index EU Index UK Index TT Index 1993 9.9 13.5 12.1 35.1 1994 8.7 13.6 12.2 30.7 1995 8.4 13.1 12.3 24.9 1996 8.3 13.0 10.7 19.5 1997 7.2 12.4 10.3 18.7 1998 6.0 11.3 9.6 19.8 1999 6.4 10.5 7.6 16.5 2000 7.4 10.5 8.7 15.9 2001 7.6 10.5 6.7 16.3 2002 7.4 10.5 6.9 Source: (Central Bank of T&T, 2001) and statistics from http://www.statistics.gov.uk Table 3: Average Construction Costs of a Three Bedroom House 1973 Costs of financing 9.04% Source: (Francis, 1997 Table 4. Commercial Banks Loan Interest Rates Year 1993 1994 1995 1996 1997 15.9 15.5 1998 1999 2000 2001 15.25 Interest rate % 13.08 15.7 15.13 17.0 17.12 17 1978 9.86% 1983 12.63% 1988 12.50% 1993 12.25% Construction costs $53,000 $140,000 $270,000 $183,150 $272,866 1997 3.0 3.7 15.0 1998 4.0 5.6 14.2 1999 5.1 3.4 13.1 2000 4.7 3.6 12.3 2001 3.5 5.6 10.7 GDP at current market prices (US$Mn) 5,784 6,104 6,760 7,973 8,860 512.5 623.4 661.1 707.7 738.1

Sources: (IMF, 1999), (Central Bank of T&T, 2001)

Figure 1. Indices of Minimum Wages

600 500

Index

400 300 200 100 0 1975 1980

Index of min. wages

1985

Year

1990

1995

Index of min. wages in construction

Figure 2. Indices of Prices

400 300

Index

200 100 0 1975 1980

Index of retail prices

1985 Year

1990

1995

Index of prices of building materials

Figure 3. GDP and construction output per capita (Current $)

100.0 80.0 60.0 40.0 20.0 0.0
19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99

Activity levels

Year
Output per capita in construction GDP per capita/1000

Figure 4 : GDP, PSIP and construction output (Current $)

6000

Activity levels ($mn)

5000 4000 3000 2000 1000 0

19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99

Year
Expenditure on PSIP GDP-current Construction

Figure 5. Employment in Construction and GDP

200 180 160 140 120 100 80 60 40 20 0
19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99

Activity levels

Year
Construction labour force Construction employment GDP in Constant $ (/20)

Figure 6: Money supply and construction output (Current $) Activity levels ($mn)
5000 4000 3000 2000 1000 0
19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99

Year
Money Supply M1 Construction output

Figure 7. Building activity, loans and construction output (Constant $)

6000 5000

Activity level

4000 3000 2000 1000 0

19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99

Year

Plans approved

Loans to construction (x10)

Construction output