After three successive years of recession, Trinidad and Tobago’s growth is estimated to have remained flat during 2019, according to IMF data. However, a more significant expansion of 1.5% is expected for 2020 as both gas production and non-oil exports are set to increase.
Last December the Central Bank of T&T (CBTT) decided to hold the benchmark repurchase rate, better known as the repo rate, at 5%. The rate has remained the same since late 2018, in line with low domestic inflation of 0.3%, stable oil prices and a sturdier global macroeconomic outlook.
In terms of lending, 2019 figures were mixed. Credit lent to the private sector decreased marginally from 4.5% in July 2019 to 4.3% in September 2019. By September consumer credit had grown by 5.9% and real estate mortgages by 10.9%.
In spite of stable or increased availability of credit, smaller and medium-sized enterprises across a number of sectors were challenged by a shortage of foreign currency. This restricted the ability of some actors to procure construction materials or import goods, and resulted in the restriction of a foreign currency spending limit on some credit cards.
The flow of currency is controlled by the CBTT, which conducts fortnightly sales to authorised dealers that then exchange T&T dollars for businesses.
See also: The Report – Trinidad & Tobago 2018
Healthy gains for hydrocarbons
Despite delays in a number of hydrocarbons projects and maintenance at two natural gas platforms, the energy sector saw fairly healthy growth in 2019. In the third quarter natural gas production rose by 3.7% year-on-year (y-o-y) to 3.6bn standard cu feet per day. This led to increases in liquefied natural gas and petrochemicals, which grew by 8% and 23.3%, respectively.
While crude oil production fluctuated throughout the year, it increased marginally from 58,000 barrels per day (bpd) in January to 59,000 bpd in August.
Following delays from the Venezuelan government regarding the development of a cross-border shallow natural gas field – which was initially agreed upon in 2013 – the government of T&T gave Shell the go-ahead to develop the field in June, after Venezuela signalled that it would no longer be participating in the project. The Loran-Manatee field holds an estimated 10trn standard cu feet of gas.
Modest growth in non-oil sectors
While non-oil sectors have not fully shouldered the fall in oil prices, there has been modest growth in certain segments such as distribution and finance, according to the CBTT.
Positive growth in cement production in Trinidad also points to an uptick in the construction sector, which has been particularly resilient thanks to continued government spending on infrastructure.
In addition to spurring activity, key road construction projects – such as the San Fernando-Point Fortin Highway and the Valencia-Toco Roadway – will open up economic developments in Trinidad’s least-developed regions.
One particular standout sector has been non-oil-related manufacturing exports, which amounted to TT$6.07bn ($897.7m) between January and June 2019, representing a 22% y-o-y rise, according to figures from the Ministry of Trade and Industry.
Manufacturing of non-alcoholic beverages witnessed the most notable growth, followed by alcoholic spirits and plastic bottles, with exports increasing by 63%, 48% and 43%, respectively. These goods performed well across the board, increasing their volumes to both traditional and non-traditional markets.
Harnessing the potential benefits of Venezuelan migration
Venezuela, which lies 15 km off the Trinidadian coast, has in the past given an economic boost to T&T thanks to shared offshore oil and gas projects. More recently, however, this proximity has resulted in an increase in the number of Venezuelan refugees fleeing the humanitarian crisis.
Although Colombia is thought to have received the most Venezuelans living overseas, T&T has some of the highest levels in comparison to its overall population size, with an estimated 60,000 refugees now residing there.
In January 2020 the government offered a six-month extension to Venezuelans who were granted permission to remain in the June 2019 government programme designed to formalise refugees in the country. The June initiative involved a two-week registration process that granted refugees the right to stay for between six months and a year, as well as basic health care. An estimated 16,500 registered during this period.
Although this sharp increase in the population clearly has implications for financing the country’s social services, there has been a notable economic benefit recorded from their presence.
For instance, refugees have helped fill low-skilled job vacancies, in turn providing a boost to consumer spending, a trend that has also been seen in other recipient countries such as Colombia.
Moreover, the Spanish-language skills of the Venezuelans could result in greater engagement in terms of both trade and investment with neighbouring Latin American economies, a long-term goal of T&T’s trade policy.