By SEAN DOUGLAS Monday, August 10 2009

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CATCH OF THE DAY: Mathew Pinder, four, tries his hand at the game 'Catch of the day' during the family day organised by the Optometrist Today at Chank...

COP leader Winston Dookeran said the country is in a technical recession but said the more vital issue is how do we get out of it.

Newsday sought his views in light of a Central Bank report, “Summary of Economic Indicators (June 2009)” which said the TT economy contracted in the fourth quarter of last year by 1.1 percent, and contracted in the first quarter of this year by 3.3 percent. Finance Minister Karen Nunez-Tesheira on Wednesday rejected the idea of a recession saying, “I don’t think so.”

Wikipedia says: “A recession is now often defined simply as a period when GDP falls (negative real economic growth) for at least two quarters. Some economists prefer a more robust definition of a 1.5 percent rise in unemployment within 12 months”.

Agreeing that the country’s two successive quarters of negative growth indicated a technical recession, Dookeran saw a bigger picture.

He said, “All this argument is very academic.

“Whether you are in a technical recession or not is an academic point of view to me.

“What is of public interest is that the economy has been slowing and has entered a phase where the output is below zero.” Dookeran reiterated that there is a technical recession.

He added, “Even if it were not a technical recession, it doesn’t deny the fact the economy is in a prolonged period of contraction, that needs an approach to get out of it.

“That is what we should be focusing on.”

Dookeran said it was therefore puerile to merely debate whether the country falls within the definition of a technical recession. He urged a higher debate, saying, “How do you get out of it?

“Do you do this by ensuring the next generation is mortgaged, by using deficit financing?” Dookeran said even if one uses deficit financing to stimulate the economy, would it be done in such a way as to invest in the old patterns which had caused the current recession and so which would in time create another recession?

Dookeran concluded, “There are two issues.

“What level of deficit financing is permissible, and what are the priorities of expenditure to take us out of the recession? On both grounds, there appears to be no consensus.”