“We are not pessimistic on the local economy, as we are not yet out of options.”
This was the statement made by RBC Investment Management (Caribbean) Ltd as it looked back on the year since the onset of the COVID-19 pandemic.
RBC Investment Management (Caribbean) said the past year was a “challenging” one.
“In particular for Q2, from a market perspective, we saw declines in all financial assets,” it stated in an advertorial published in yesterday’s Business Guardian magazine.
The Roytrin Funds, however, said it capitalised on the Q2 turmoil and this strategy paid off.
“The trough to peak recovery in the S&P 500 during 2020 was a whopping 63 per cent and so to the extent that we bought on this pullback, the return of the Funds were enhanced relative to the overall market,” it stated.
RBC said it anticipates markets will sway between “hopes for an eventual recovery from the pandemic and the sobering short-term reality of the current environment.”
RBC said the T&T economy remains challenged with negative growth recorded for three out of the past five years between 2015 to 2019.
“We believe this is the opportune time for governments and businesses to re-evaluate their business models. The old models that were heavily reliant on the supply of US dollars from the energy industry will not work as well going forward,” it stated.
RBC said this may be the time to start developing new businesses focused on increasing self-reliance. With surplus liquidity remaining high, RBC said there is ample room to borrow local currency without increasing inflation.
“This does not mean inflation will not increase- but if it does, it will not be due to increased borrowings in local currency, but rather due to shortages of US dollars and other factors related to the disruptions in supply chains brought on by the pandemic,” it stated.
RBC said this effectively buys T&T some time to get the right projects going.
“To the extent that these projects get off the ground and are targeted at reducing imports, increasing exports, then T&T will start to see some recovery over the upcoming years,” it stated.