Trinidad & Tobago (T&T)'s economy will see weak economic activity growth in the coming years, as structurally lower oil prices weigh on consumption, investment and net exports. Low oil prices will weigh on the hydrocarbon sector's 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. Tight control over foreign exchange sales by the central bank will prevent a significant depreciation of the currency, although the bank will allow the unit to gradually depreciate.
Major Forecast Changes:
We have downwardly revised our real GDP forecast in 2017 to 2.5% growth, from 3.1% previously, amid signs of weak investment and consumption.
We have downwardly revised our current account forecast in 2016 to a 6.8% deficit, from 2.1% previously, due to the continued weakness of hydrocarbons exports. We forecast deficits to persist in the coming years.
We do not expect additional interest rate hikes in 2016, due in large part to an anticipated rate hold in the US.
The primary risks lie to the downside. Should oil prices fail to sustain a recovery in H216, 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||-2.1||-1.7||2.5|
|Nominal GDP, USDbn||28.2||26.6||24.9||24.6|
|Consumer price inflation, % y-o-y, eop||8.5||1.5||3.9||5.3|
|Exchange rate TTD/USD, eop||6.36||6.42||7.06||8.50|
|Budget balance, % of GDP||-2.5||-4.2||-6.1||-5.1|
|Current account balance, % of GDP||4.5||-5.0||-6.9||-4.0|
Assess your risk exposure in Trinidad & Tobago with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Trinidad & Tobago with confidence.
Your subscription service includes:
- Delivery of the report in print and PDF
- Online access for 12 months
- The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
- The ability to export data and graphs from the online report directly into your workflow
- The support of a dedicated Account Manager to answer any questions you might have about your subscription
- Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report