Trinidad & Tobago (T&T)'s economy will see weak economic activity growth in the coming years, as persistently weak oil prices weigh on consumption, investment and net exports. Low oil prices will compound the country's hydrocarbon sector poor production outlook, while non-oil industries will struggle to become competitive.
The government will post consistent fiscal deficits, as low oil prices weigh on revenue collection. Expenditure cuts will be limited, as the government seeks to support economic activity.
Lower oil prices will place depreciatory pressure on the Trinidadian dollar (TTD) over the coming quarters, resulting in a deterioration of the country's terms of trade and weaker investment inflows. Open market operations by the central bank will prevent a significant depreciation of the currency, although the bank will allow the unit to gradually depreciate in the coming quarters.
Major Forecast Changes:
We have downwardly revised our current account surplus forecast to 1.0% of GDP in 2016 and 1.7% in 2017 due to continued weakness in oil exports.
We have downwardly revised our fiscal deficit forecast to 7.6% of GDP in 2016 and 7.4% in 2017 due to our Oil & Gas team's downward revision of its forecast oil price.
The primary risks lie to the downside. Should oil prices remain at current levels through 2016, the recession in T&T could be more severe than currently anticipated. In such a scenario, the CBTT could allow the Trinidadian dollar to depreciate more quickly than forecast, precipitating rising inflation, falling imports and a risk of capital flight.
|e/f=BMI estimate/forecast; Source: National Sources/BMI|
|Real GDP growth, % y-o-y||1.9||-1.5||-0.2||2.7|
|Nominal GDP, USDbn||28.2||28.5||28.6||28.1|
|Consumer price inflation, % y-o-y, eop||8.5||3.3||3.9||5.3|
|Exchange rate TTD/USD, eop||6.36||6.42||6.50||6.75|
|Budget balance, % of GDP||-2.7||-5.8||-7.6||-7.4|
|Current account balance, % of GDP||5.8||1.7||1.0||1.7|
The Trinidad & Tobago Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Trinidad & Tobago. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Trinidad & Tobago's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.
- Forecast the pace and stability of Trinidad & Tobago's economic and industry growth through end-2019.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Trinidad & Tobago's country risks against regional peers using BMI's country comparative Risk Index system.
- Evaluate external threats to doing business in Trinidad & Tobago, including currency volatility, the commodity price boom and protectionist policies.
BMI provides our fully independent 5-year forecasts for Trinidad & Tobago through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Trinidad & Tobago Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
- Foreign Direct Investment - approvals, inflows and climate.
- External Debt - debt profile (short and long-term plus public and private sector obligations).
- Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.
- Rely upon BMI's 100% independent forecast scenarios for Trinidad & Tobago and underlying assumptions - we take no advertising and are privately-owned.
- Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Trinidad & Tobago, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
- Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.
What are the political risks to doing business in Trinidad & Tobago over the next 5-years?
BMI's Trinidad & Tobago country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents
- SWOT Analysis for the Trinidad & Tobago Market - Political Strengths, Weaknesses, Opportunities and Threats facing Trinidad & Tobago.
- Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Trinidad & Tobago's risk are compared with regional and global averages.
- Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
- Long-Term Political Outlook BMI examines the structural risks to the stability of Trinidad & Tobago’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.
- Benchmark Trinidad & Tobago's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
- Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
- Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.
What are the current operational risks and difficulties associated with doing business in Trinidad & Tobago?
The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Trinidad & Tobago against its neighbours.
Operational Risk Contents
The chapter provides a summary of the main threats in the country, within:
- Labour Market Risk (Education; Availability of Labour; and Labour Costs)
- Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
- Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
- Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).