PORT OF SPAIN, Trinidad, CMC –The Central Bank of Trinidad and Tobago says the local economy is expected to improve in 2023, bolstered by activity in the energy sector.
In its Economic Bulletin for January, the CBTT said that natural gas supplies would be boosted by key upstream energy sector projects such as Shell Trinidad and Tobago’s Colibri, Denovo’s Zandolie, and bpTT’s Cassia Compression.
“Over the short term, energy prices are anticipated to remain elevated but may experience some softening. Stronger energy revenue will add to the fiscal space available for capital expenditure and targeted support programs. Increased business activity and continued recovery of consumer demand are expected to strengthen the performance of non-energy sectors.”
The CBTT said that the pace of this recovery would depend in considerable measure on the extent of business confidence and, relatedly, how much progress is made in improving the ease of doing business in Trinidad and Tobago.
“Barring a major resurgence in the COVID-19 pandemic, the restart of national festivals and ancillary activities, such as the return of cruise ships, are anticipated to be components of a more durable and broad-based recovery. Meanwhile, domestic inflation is likely to continue to rise in early 2023 and moderate after that in line with global developments,” the central bank noted.
The CBTT said domestically, economic activity improved in the second quarter of 2022, reflecting a resurgence in non-energy sector performance.
Data published by the Central Statistical Office (CSO) indicate that the actual gross domestic product (GDP) expanded by 6.6 percent year-on-year during the second quarter of 2022. Growth in the non-energy sector was strong at 10.5 percent, while the energy sector declined by 2.5 percent.
The unemployment rate was 5.4 percent in the third quarter of 2022. This is similar to the corresponding quarter of 2021 but higher than the 4.5 percent recorded in the second quarter of 2022.
The bank said the supplementary indicators it uses to monitor overall labor market conditions suggest that conditions may improve. In particular, the Ministry of Labour data indicated that 38 persons were retrenched from August to November 2022 compared to 416 persons during the corresponding period in 2021.
In addition, the number of job advertisements published in the print media declined only marginally, as the demand for labor remained relatively firm during the period.
The CBTT said that, driven by external and domestic supply-side factors, headline inflation accelerated during the second half of 2022.
“The surge in international food commodity prices, supply disruptions, and adverse local weather conditions helped to push headline inflation to eight percent year-on-year in November 2022, the highest rate since late 2014, compared to 4.9 percent in June.”
Core inflation increased to 6.6 percent, while food inflation jumped to 13.8 percent in November 2022 from 4.1 percent and 7.8 percent, respectively, in June 2022.
The CBTT said the Central Government accounts recorded an improved year-on-year outturn in the first quarter of the financial year 2022/23. Data from the Ministry of Finance showed that the fiscal reports recorded a surplus of two billion US dollars (One Tt dollar=US$016 cents) in October-December 2022, compared with an excess of TTS$653.9 million in the same quarter one year earlier.
It said energy revenue doubled, outstripping the fall in non-energy revenue and the increase in expenditure between these two quarters. At the end of December 2022, adjusted general Government debt outstanding, which excludes debt issued for sterilization purposes, amounted to TT128.8 billion, compared with $129.7 billion in September 2022.
The CBTT said it had kept the Repo rate at 3.50 percent in December 2022 since March 2020. In taking this decision, the Bank’s Monetary Policy Committee continued to balance external factors, remarkably increasing US interest rates, against domestic factors such as the pace of the economic recovery and inflation.
“Even as economic activity picked up and credit growth expanded, liquidity remained ample. Private sector credit growth expanded in the second half of 2022, driven by robust corporate lending and a rebound in consumer loans. The TT-US 91-day differential widened to -392 basis points in December 2022 compared with -278 basis points in September 2022.”
Meanwhile, at the end of December 2022, gross official reserves amounted to TT$6,832.4 million, equivalent to 8.6 months of import cover.
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