TRINIDAD-GDP contracted by more than two per cent during the first quarter of this year.

PORT OF SPAIN, Trinidad, CMC – The Central Bank of Trinidad and Tobago (CBTT) says the trend of sluggish non-energy sector activity may have persisted during the second quarter of 2025.

Indicators monitored by the Central Bank suggest that the continued positive performance of the distribution sector, albeit at a slower pace, may have been countered by tepid activity in the construction and manufacturing sectors,” the CBTT said in its Monetary Policy Announcement for September.

The CBTT stated that, according to data from the Central Statistical Office (CSO), real gross domestic product (GDP) contracted by 2.1 percent year-on-year during the first quarter of 2025, with output declines of 4.8 percent in the energy sector and 1 percent in the non-energy sector, respectively.

It said preliminary data from the Ministry of Energy and Energy Industries suggests mixed performances heading into the second quarter.

In April this year, the production of natural gas fell by 2.1 per cent year-on-year, while crude oil production registered a slight increase of 0.3 per cent. The petrochemical industry experienced expansions in ammonia (6.9 percent) and urea (26.7 percent), but there was a notable decline in methanol output (-28.1 percent).

The CBTT said that domestic price pressures remain relatively contained. Headline inflation, as measured by the CSO’s Consumer Price Index, stood at 1.4 per cent year-on-year in August this year, unchanged from the rate three months earlier.

It stated that core inflation, which excludes food prices, rose marginally to 1 percent, while food price increases, influenced by a decline in vegetable prices, decelerated to 2.9 percent. Building material prices and wholesale prices rose by 2.4 per cent and 1.2 per cent year-on-year, respectively, in the second quarter of 2025.

The central bank stated that financial conditions were broadly favorable, but market liquidity remained somewhat volatile.

It said commercial banks’ excess reserves at the Central Bank averaged TT$4.2 billion (One TT dollar=US$).16 cents) In August 2025, the figure slipped to TT$3.9 billion by the end of the first half of September 2025.

Government financing operations have impacted liquidity conditions, robust credit growth, and, indirectly, central bank sales of foreign exchange to authorised dealers. The CBTT said tighter liquidity appeared to affect the pace of credit expansion. Overall, private sector credit in the financial sector rose by 7.7 percent year-on-year in July 2025, down from the 9.1 percent growth in April 2025.

Business credit expanded by 8.1 percent, driven by loans to the distribution, finance, and manufacturing sectors. Consumer lending grew by 9.9 per cent, but there was a slowdown in loans for motor vehicles and bridging finance. Real estate mortgage loans increased by 6.3 per cent.

The CBTT stated that the Monetary Policy Committee (MPC) has noted that global economic uncertainty appears more acute, particularly with rising geopolitical tensions in the territorial spaces adjacent to Trinidad and Tobago.

“While inflation is likely to remain low in the near-term, growth prospects seem tentative. The anticipated boost to energy production in the second quarter of 2025 from two new natural gas fields may be countered by lacklustre non-energy sector activity. Credit growth may continue to moderate, and labour market conditions may loosen, both of which are likely to be impacted by the restructuring of government employment programs.

“These factors point to some moderation in aggregate demand. On the external accounts, pressures may moderate as tariff uncertainty eases with the implementation of further trade agreements. Further, short-term interest rate differentials are likely to improve should softer labour conditions persist in the US, forcing the US Fed to lower its monetary policy rate and at a faster pace.”

The CBTT stated that, taking all these factors into account, the MPC agreed to maintain the repo rate at 3.50 percent.