PORT OF SPAIN, Trinidad, CMC – The Central Bank of Trinidad and Tobago (CBTT) says economic activity is expected to improve this year, bolstered by energy and non-energy sectors.
In its Economic Bulletin for July, the CBTT said natural gas supplies should continue to benefit from critical upstream energy sector projects such as Shell Trinidad and Tobago’s Colibri, DeNovo’s Zandolie, and bpTT’s Cassia Compression.
It said non-energy sector performance will be driven by increased business activity and the continued resurgence of consumer demand.
The CBTT said headline inflation is expected to continue along a path of deceleration in the short term. Food inflation will likely ease further, driven by slowing local produce prices, barring weather-related shocks to domestic agricultural production, and steadying international food prices.
“Similarly, core inflation is anticipated to continue its downward trend as mounting price pressures from late 2022 subside, including the pass-through of higher fuel prices, which appears complete,” the CBTT added.
The CBTT said that domestic indicators suggest that there was an uptick in activity in the non-energy sector. In contrast, energy sector output was steady in the first quarter of 2023. It said notwithstanding improvements in liquefied natural gas (LNG) and methanol output during the quarter, activity in the energy sector was dampened by reduced production of crude oil, natural gas, natural gas liquids (NGLs), ammonia, and urea.
On the non-energy side, strengthening business activity and consumer demand led to increased economic activity in the transportation and storage, wholesale and retail trade, electricity and water, and construction sectors. In contrast, training in the finance and insurance, manufacturing, and agriculture sectors were less buoyant.
The bank said domestic inflation slowed during the first half of 2023, while unemployment improved in the latter half of 2022 and into 2023.
According to the latest available data from the Central Statistical Office (CSO), headline inflation slowed to 5.8 percent in June 2023 from 8.3 percent in January 2023. Food inflation, generally the most volatile headline, decelerated to 10.1 percent in June 2023 from 17.3 percent in January 2023.
Core inflation fell to 4.8 percent in June 2023 from 6.1 percent in January 2023 as price increases in most sub-indices eased.
Meanwhile, CSO data highlighted that the unemployment rate slowed to 4.9 percent in the first quarter of 2023 from 5.1 percent in the corresponding quarter of 2022.
The CBTT said retrenchment notices, a supplemental indicator of job separation, suggest a year-on-year decline of 14.5 percent in job losses from January to May 2023, particularly in the transportation, communication and storage, personal services, and petroleum and other mining sectors.
The CBTT said the Central Government’s fiscal position remained in surplus, albeit lower than the corresponding period one year earlier. It told the budgetary accounts recorded a surplus of TT$88 million (One TT dollar=US$0.16 cents) in the first nine months of the fiscal year 2022/23 (October 2022 to June 2023), compared with a surplus of three billion dollars in the same period a year earlier.
“Total revenue rose by TT$2.3 billion, while expenditure grew by TT$5.2 billion. Adjusted General Government debt outstanding (which excludes debt issued for sterilization purposes) increased to TT$134.6 billion (68.2 percent of GDP) in June 2023 from TT$129.7 billion (66.5 percent of GDP) recorded at the end of September 2022.”
The Central Bank said it sustained its monetary policy stance to support domestic economic recovery.
It said excess liquidity continued to be managed to facilitate the smooth operation of financial markets and to support ongoing credit expansion. Commercial banks’ excess reserves at the Central Bank increased from a daily average of TT$6.6 billion in March 2023 to seven billion dollars in June 2023.
Ample liquidity bolstered private sector credit during the first five months of 2023 as consumer and real estate lending expanded while business lending growth slowed.
The CBTT said Trinidad and Tobago’s gross official reserves amounted to US$6,461.5 million at the end of July 2023, US$370.9 million lower than at the end of December 2022. “The external accounts registered an overall deficit in the first seven months of 2023. The reserves at July 2023 represent 8.1 months of prospective imports of goods and services,” the CBTT added.
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