Answer to Question #209340 in Macroeconomics for Mo'Nique

Question

Discuss how Covid19 has impacted Trinidad and Tobago employment, GDP, and inflation level.

Answer 1

Employment

The unemployment level has gone up due to the economic impact of the pandemic. This is because there has been closure of non essential services within the economy leading to companies being unable to generate sufficient income to cater for expenses , mainly wages and salaries for their employees. Hence , many workers have lost their jobs and the government is trying to address this issue by providing income support for the retrenched and also by bringing forth wage relief grants.

GDP

There has been contraction of the overall GDP growth due to the fall of economic activities across all sectors such as construction and transportation and accomodations and food services. Economic growth has only been realised in the insurance sector and electricity and gas. The government budget deficit has increased significantly to a larger percentage of GDP than that realised before. Due to the need to curb the pandemic, the government outlays have had to be controlled and thus government expenditure has greatly increased.

Inflation level

Inflation level has been low due to weak economic activity for instance, a fall in price of medication that has decreased the component of outcome in the healthcare sector. It has been realised that inflation level will continue being low . This is due to slow progress of economic activities in the economy.