Economist warns businesses of 'black swan events'

An image of the International Waterfront in Port of Spain. -

It can happen to any business.

A series of unfortunate circumstances and challenges that combine to create a situation so dire for a business or for an economy that it would cause it to shut down.

Senator and economist Marlene Attzs in a keynote address to businesses at the a conference hosted by the TT Extractive Industries Transparency Initiative and the TT Chamber of Industry and Commerce at the chamber’s building on Columbus Circle, Westmoorings on January 13, called it a “black swan” event. She described it as a convergence of shocks and challenges that would mean the death of a business.

“I did a presentation sometime last year for a company and they asked me at the end of the presentation to identify a “black swan” … that extremely high-impact event that could derail them… I think it would be remiss of us, since this is a business forum, to not think about those conditions that could derail the best laid plans…”

This very paper – Newsday – is itself no stranger to a situation like this. In an announcement on January 9, managing director Grant Taylor cited a “perfect storm” of issues that led to the decision to begin the process for winding-up the company after more than three decades.

Newsday is not alone in this either. Several businesses in many industries from energy to retail to entertainment have either seen significant downsizing or have closed down altogether.

At the conference, Attzs said the “black swan” event could already be in play – a coalescing of a number of events that could shift the landscape for businesses in the energy industry.

“We saw what happened in the last couple of weeks, where air spaces were compromised and decisions had to be made and flights had to be cancelled.

“Think about if that were to be intensified. Think about what would happen if, alongside what is happening in our “neighbourhood,” as it were, then spreads outwards in terms of the rising US and China rivalry, or renewed Russian activity.

“Countries such as ours are in the periphery, but we are really caught in all of the concentric circles of what that ‘black swan’ event could mean.”

Marlene Attz, economist and Independent senator - .

She said TT businesses, not just in the energy sector but on the whole, will have to professionalise, modernise and prepare by using data to be less vulnerable to black swan events.

Attzs was among a panel which included TTEITI co-ordinator Sherwin Long, senior fellow at the Sir Arthur Lewis Institute of Social and Economic Studies Preeya Mohan and TTEITI chairman Gregory McGuire. They all identified risks to the TT economy, the first of which was TT’s dependence on oil and gas and the lack of drive toward diversification.

“When we look at GDP, negative energy sector growth almost always coincides with lower negative total GDP growth,” Long said.

He added that energy sector revenue remains a major contributor to total government revenue and forex availability but the sector is very volatile.

Long said between 2011 and 2024 the upstream sector contributed US$17.3 billion in forex. Companies such as bpTT and NGC contributed more than US$ 7 billion in forex over the period.

“The volatility seen here is largely driven by external factors that are out of our hands,” he said. “Whether it is global energy prices, demand-supply imbalances, geopolitical tensions, what have you – for businesses this volatility could signal fiscal pressure and the need for policy response.

“We know foreign exchange, availability impacts the cost of imports, and financial planning.”

While Long pointed out government’s dependence on the energy sector as a risk, Attzs noted the risk of the nation’s economic dependence on the government.

“I do think that at the macro level, we need to move away from the economic paradigm that says governments are able to be all things to all persons. Because they are constrained – financially constrained – and there are just too many things happening for them to focus.”

Attzs also pointed out TT’s rising debt challenge noting that latest data indicated that TT’s debt to GDP ratio, which shows a country’s ability to repay debts relative to its economic output, was at 85 per cent and rising.

“We know, based on the fiscal package that was read for 2026, that there is likely to be even more challenges in terms of government meeting its expenditure projections based on the revenue projections. So this is something we need to keep an eye on.”

Mohan highlighted the upcoming risks associated with policies in other countries and trade particularly through the Carbon Border Adjustment Mechanism (CBAM) and adjustment to tariff regimes.

“We are moving from a world where we are no longer competing on just price, but we are feeling the effects of reciprocity and climate concerns where we are looking at exporting and trade.

“We have traditional protectionism in the form of (US) president Donald Trump’s tariffs. We also have green trade tariffs in the form of CBAM. The European Union (EU) is implementing its own version (and) we have the UK CBAM coming on board very soon. We also have the US prove it act and we also have the 2023 IMO shipping strategy, which is going to increase our shipping cost. “This raises serious competitiveness issues for our exporters.”

She said while 14 per cent of TT’s exports go to the EU, 90 per cent of those exports could be affected by CBAM. With regard to the US, 30 per cent goes there, but half of those exports would be exposed to CBAM.

Other countries where we have smaller exports will also implement their own carbon taxes. Mohan said while exports to countries like Japan, Canada and other countries account for around three per cent of exports more than 90 per cent of those exports is expected to be affected by individual carbon taxes.

She said studies out of UTT determined that the EU CBAM burden would actually increase taxes in the ammonia sector in TT by 22 per cent.

However, if emission reductions technologies such as carbon capture and storage is implemented, the taxes could be eliminated.

Attzs and the other presenters concluded that, in uncertain times such as these, the best benefit to any business or economy would be certain data.

“Readiness – individual company, business and sector readiness – is what is going to determine their survival,” Attzs said. “You would need to be prepared. You would need to have the data to help you prepare. You would need to have the risk analysis done You need to identify the ‘black swans’ in your specific sector.

“Our business community is not homogeneous, it is heterogeneous. We have to professionalize, modernise and position ourselves for a more disciplined and more stable economic future.”

She said businesses have an opportunity to look at data and think strategically about what the future would look like rather than take up alarmist rhetoric.

She said the business sectors need "to use the data in front of us, use data available to us to say, Well, alright, hang on a moment. How am I going to use this to build more resilience."

"We are in a period of high uncertainty, and we therefore have to build resilience. We have to use the information available to us to build resilience. We have to use the information available to us to be more strategic in terms of how we plan, and we have to use the information available to us to understand the risks to which we collectively, are exposed and how we can therefore craft strategy to help us survive and compete."