In the first quarter of 2017 the People’s National Movement (PNM) government of Prime Minister Keith Rowley was close to having completed its first 18 months in office. The administration had come to power at a difficult time for the economy. Mainly as a result of the slump in international energy prices and a slowdown in production, Trinidad and Tobago’s oil-and-gas-dependent economy has suffered three consecutive years of recession (2014-16). The new government has had to begin a process of fiscal adjustment and address the challenge of economic diversification. On the plus side, after facing very pressing short-term fiscal priorities during its first year and a half in office, the government is beginning to have the time and space to decide how to tackle longer-term issues.
Significant challenges still lie ahead. A slight economic recovery is expected for 2017-18, based on a number of new gas projects coming on-stream and a small pickup forecast in international hydrocarbons prices. Getting the country onto a stronger and more sustainable growth path will depend on delivering deeper reforms and effectively managing a new generation of public-private partnerships.
T&T has one of the larger economies in the English-speaking Caribbean, with GDP of $20.97bn and a population of 1.37m in 2016, according to the IMF. With a GDP per capita of $15,342, it enjoys some of the highest living standards in Latin America and the Caribbean. The twin-island republic is classified by the World Bank as being a high-income country. It has a more diversified economy than many of its tourism-dependent Caribbean neighbours. However, since the 1970s the driving force of the economy has been the oil and gas sector. Hydrocarbons production and downstream development, including the production of liquefied natural as (LNG), methanol, and urea, have raised living standards but also have increased the country’s vulnerability to cyclical commodity downturns, like the one currently in progress. According to the latest available data from the Central Bank of T&T (CBTT), energy activities represented 34.9% of GDP in 2015, with non-energy activities accounting for 64.7%. The largest sectors outside of energy were finance, insurance and real estate with 16.7%, distribution and restaurants (13.8%), and manufacturing (8.1%).
A 2016 Article IV Consultation by the IMF published in June 2016 said that T&T’s output continued to decline as falling global energy prices widened the fiscal deficit and were pushing the current account into negative territory. It estimated that GDP fell by 2.1% in 2015 and would contract by another 2.7% in 2016. However, according to the fund’s latest World Economic Outlook, from April 2017, GDP fell more than expected, by 5.1%, in 2016.
The IMF expected the fiscal deficit to have widened to 4.7% of GDP in FY 2015, and forecast it would have grown further to a projected 10.9% of GDP in FY 2016. Foreign currency reserves fell from $11.3bn at the end of 2014 to $9.8bn at the end of 2015. Core inflation was 2% in 2015, while unemployment remained low at 3.6%, a relatively benign level attributed to the impact of the so-called make-work schemes, including the Unemployment Relief Programme and Community-Based Environmental Protection and Enhancement Programme.
The IMF noted the government had introduced fiscal austerity measures in the budget for FY 2016, including further mid-year adjustments. The CBTT began tightening monetary policy to limit capital outflows from late 2014, although the interest rate rises were paused in early 2016. The T&T dollar had been allowed to depreciate modestly, but the fund believed it remained substantially overvalued. It noted that the banking system remained strong, and there had been some progress to overcome statistical shortcomings. The IMF described the fall in energy prices as a major challenge to T&T’s economy. While it praised the new government’s efforts at fiscal consolidation, it stressed that a strong medium-term fiscal plan was needed to re-establish a sustainable fiscal path and ensure debt sustainability. It called for comprehensive structural reforms, including further energy sector taxation reform, improved financial sector supervision, and action to address inefficiencies in the public sector.
Corruption & Security Issues
Like a number of countries in Latin America and the Caribbean, T&T suffers from what are perceived as high rates of corruption and crime, which can be a disincentive to foreign investors. In the 2016 Corruption Perceptions Index (CPI) compiled by anti-corruption lobby Transparency International (TI) T&T placed in the bottom half of the international ranking at 101st out of 176 countries. The country scored 36 (on a 0-100 scale where lower scores mean greater levels of perceived corruption), below the average score for the Americas of 44. TI’s assessment is that a score below 50 indicates that governments are failing to fully tackle corruption.
In terms of relative positions, T&T dropped from 72nd place in the 2015 ranking to 101st position in 2016. Some efforts have, however, been made to improve standards, such as the passage in 2015-16 of a new procurement law, which has not yet been regulated. “There has been some progress in introducing anti-corruption measures, but more needs to be done,” Dion Abdool, chairman of T&T Transparency Institute, TI’s affiliated lobby group in T&T, told OBG.
The country also faces concerns about a high crime rate, connected to drug trafficking and gangs in certain areas. In both 2015 and 2016 the homicide rate exceeded 400 per annum, equivalent to roughly 30.7 homicides per 100,000 inhabitants. This is less than Jamaica, where it stands at 50 per 100,000, but still considered excessive. In a survey conducted for the World Economic Forum’s “Global Competitiveness Report 2016-17”, respondents were asked to list the most problematic factors for doing business. Corruption was seen as the second-most-important factor in T&T, identified by 14.4% of respondents, with crime and theft in fourth position (11.9%). The first and third factors troubling business were, respectively, poor work ethic in the labour force (19.8% of respondents) and inefficient government bureaucracy (13.9%).
Budget For 2017
Colm Imbert, the minister of finance, presented the budget for FY 2017 (the year to September 30, 2017) in Parliament at the end of September 2016. Faced with the continuing slump in oil and gas revenues, Imbert announced various measures to increase taxes. One of the most important was the so-called millionaire tax. This new tax, set at 30%, would be applied to individuals earnings in excess of TT$1m ($149,000) effective from the beginning of calendar year 2017. The same tax would be applied to companies reporting profits above TT$1m ($149,000). Imbert estimated that the levy would bring in an additional TT$560m ($83.7m) worth of revenue to state coffers.
Other New Taxes
Imbert also announced the reintroduction of the property tax. Set to be introduced in FY 2017, the tax will apply to both vacant and occupied land on a rental value basis and will range from 3% for residential properties to 6% for built-up industrial land. A 10% deduction for voids will be applied. The minister said a further stage in the reduction of motor vehicle fuel subsidies would also be enacted. Diesel prices would increase by 15%, taking them up to 75% of market rates. Reducing fuel subsidies gradually over a number of years has been one of the government’s responses to the fiscal squeeze it is experiencing.
The proposed 7% tax on online shopping – first announced in 2016 – would be introduced effective from October 20, 2016. The tax would be payable as goods were dispatched from warehouses, or directly to Customs. Also in line with previous announcements, Imbert said the government would press ahead with its plan to create a single revenue authority in 2017, effectively merging two existing bodies, the Board of Inland Revenue and the Customs and Excise Division. Officials believe that a single authority will be able to collect taxes more efficiently and reduce tax evasion.
In March 2016 Imbert also announced the government’s intention to pass the Gambling (Gaming and Betting) Control Bill, which would introduce new regulatory controls and ensure the industry is contributing tax revenue. “The government does not receive its fair share of taxes from the gaming sector, despite the size of the industry, the number of people employed and the amount of revenue generated,” said Imbert. The National Lotteries Control Board (NLCB) operates as both an operator of the nation’s lotteries and the industry regulator. Marvin Johncilla, chairman of the NLCB, believes, however, that this situation needs to change. “We would welcome the proposed legislation, but believe it would be an effective move to establish an independent regulator for the industry, thus allowing NLCB to focus on its core competency of gaming, which also generates sufficient tax revenue,” he told OBG.
Incomings & Outgoings
The overall budget spend for the year was set at TT$53.5bn ($8bn), a small increase on FY 2016. Reflecting the sharp fall in oil and gas revenues, tax receipts were expected to drop to TT$37bn ($5.5bn), down 35% on their 2014 levels. Total revenues, including asset sales, were projected at TT$47.4bn ($7.1bn). As a result, there would be a fiscal deficit of just over TT$6bn ($896.5m) or an estimated 3.9% of GDP. The IMF and other international bodies arrive at a different deficit-to-GDP ratio due to the inclusion of one-off revenue measures as financing, and therefore estimate the fiscal deficit to be higher. The budget was built on the assumption of an average oil price of $48 per barrel, a little under the IMF forecast of $50. As Imbert announced in March 2017, a drawdown from the Heritage and Stabilisation Fund of TT$1.71bn ($255.5m) would be used to fund development projects earmarked under the 2017 Public Sector Investment Plan and account for the deficit gap.
Proposed asset sales included the divestment of a further tranche of shares in NGL, a subsidiary of state-owned National Gas Company of T&T. There were also plans to divest shares in financial group First Citizens Holdings and some other public sector holdings. In March 2017 First Citizens Bank made another block of shares available through an additional public offering (APO). Of the government’s 78% stake, 20% was made available, which would reduce the state’s share in First Citizens to 58%. An estimated $1.55bn was expected to be raised by the APO. However, with 66%, or 32m shares, of the issue subscribed, the sale was undersubscribed by more than 16m shares, creating a shortfall of around $526m.
The budget also contained a number of incentives targeted at specific activities and economic sectors. Private sector entities funding public infrastructure, facilities, amenities and services now provided solely by the government would qualify for tax relief of up to 50% and other appropriate fiscal incentives, Imbert said. The government would consider whether other projects designed to increase productivity and employment should also qualify for incentives. Regulations were being drafted to provide income tax relief to investors building multi-family residential units, part of a government effort to stimulate the supply of affordable housing and facilitate construction industry growth (see Construction chapter). Maintenance and repair work on foreign yachts would become exempt from value-added tax (VAT) from the first quarter of 2017. From the second quarter of 2017 agro-processing activities would also become tax-exempt.
Reactions To The Budget
There were various reactions to the budget. Analysis by accountancy group PwC supported the government’s aim of achieving a balanced budget over a multi-year period, but raised some questions over technical aspects of the tax-raising measures. While the property tax rate had been set at 3% for residential buildings, PwC said it was difficult to assess how reasonable it might be until more was known about how properties would be valued. The new 30% millionaire tax meant that the country was once more moving away from a single, flat income-tax rate, which was easier to administer. There were also questions about how income would be deemed to be split between married couples or other joint groups of taxpayers, and whether there might be under-reporting to evade the higher rate tax. PwC also highlighted some unanswered questions about the new online sales tax: whether it would apply to all purchases or only those above a certain threshold, and whether it would be applied to goods coming in from any country or whether CARICOM countries would be exempt. PwC also noted that apart from mentioning a potential investment by the Sandals hotel chain in Tobago and offering tax breaks for agro-processing and yacht repairs, the budget did not provide much detail on the government’s intended roadmap for promoting economic diversification.
A budget review by professional services firm EY described the fall in government revenues between 2014 and 2016 as totalling TT$20bn ($3bn) and constituting a tremendous shock to the system. It made the general point that the government needed to strike a balance between incentivising new oil and gas investment, on the one hand, and securing fair and stable returns from exploration and production, on the other. It noted the importance of a review of the oil and gas taxation regime being carried out with IMF assistance.
EY highlighted the significance of potential joint exploitation with Venezuela of cross-border fields. On the fiscal side it described the new tax measures as likely to have “modest” revenue-generation impact. “The government has done as much as it can to reduce expenditure in the short term,” Tomás Bermúdez, the country representative of the Inter-American Development Bank, told OBG. “They have adjusted on the spending side, and they are doing their homework on the revenue side. But the deficit is still 10% of GDP and they are still having a hard time.” In his opinion, the government had taken the necessary short-term holding measures: the big question now was whether it would tackle deeper reforms to reduce the large transfers and subsidies budget line and encourage the private sector to come out of its “comfort zone” – exporting to the English-speaking Caribbean – and develop new markets in Central America, Latin America and Africa.
Mid-year Budget Review
In May 2017 Imbert presented the mid-year budget review, which saw a mild uptick in government revenue for FY 2017 from TT$47.4bn ($7.1bn) to TT$48bn ($7.2bn), due to expected increased tax revenues from the energy sector. Government expenditure for the first half of FY 2017 came to TT$23.5bn ($3.5bn), 14% lower than originally projected. There has also been a marginal reduction to the projected 2016/17 fiscal deficit, from TT$6bn ($896.5m) to TT$5.9bn ($881.6m). Measures that were outlined to fund the deficit included further divestment of state-owned enterprises.
Two different bodies in T&T, the CBTT and the Central Statistical Office (CSO), produce GDP data using different methodologies. The CSO produces annual GDP data and is regarded as the most authoritative source for assessing annual growth trends in the economy. The CBTT, meanwhile, produces quarterly GDP data, which gives more of a short-term assessment and has narrower scope. One consequence of this is that CBTT quarterly data is not necessarily consistent with the annual CSO numbers.
In its November 2016 report the CBTT’s preliminary estimates for GDP suggested it was experiencing a much sharper contraction than might have been signalled by the CSO’s annual series. The central bank concluded that after a 0.6% dip in 2015, GDP fell by 6.7% in the first half of 2016, with the energy sector dropping by 10.8%, while the non-energy sector contracted by 4.3%. In its latest report, published in March 2017, which includes preliminary figures for entirety of 2016, the CBTT reported that GDP contracted by 2.3% in real terms, with the energy and non-energy sectors contracting by 9.6% and 1.8% respectively.
Energy In Detail
This steep reduction reflected lower oil and gas production, lower energy prices and the fact that two major oil companies, BHP Billiton and BP T&T (BPTT), had suspended normal operation for a period to prepare new fields for production. This created knock-on effects in the downstream sector, with LNG production dropping 15.2% in the first half, the refinery sector falling by 10.1% and petrochemicals output down by 2.9%. Methanol production – also affected by plant maintenance – fell 7.9%, but fertiliser production registered a small increase.
These negative trends appear to have continued in the second half of 2016. The CBTT said its quarterly index of real economic activity – a weighted average of output changes in selected commodities – suggested that output from the energy sector declined by 14.6% in the last six months of 2016. Natural gas production fell by 15.4% between July and December 2016 because BPTT shut down its Mahogany Bravo gas hub to allow new tie-in lines to be installed to serve the new Juniper field, expected to come on-stream in 2017 (see Energy chapter). This impacted production of natural gas liquids, which fell by 18.1% year-on-year (y-o-y) in the second half. Output from Atlantic LNG also fell, by 16%.
CBTT data for the non-energy sector in 2016 confirmed a decline in construction, signalled by lower cement and aggregates sales. Construction GDP was estimated to have dropped by 20% in the first half of the year and continued to contract in the second half. Government-backed public works activity, including road construction and residential home building, was weak.
Manufacturing GDP was down by 6.5% in the first half of the year followed by 4.3% in the second half, due to weakness in the chemicals and assembly plant subsectors, with the latter particularly affected by the closure of the ArcelorMittal steel plant in November 2015. Distribution activity was reported to have fallen by 3% in the first half of the year, with declines in motor vehicles and parts (-3.3%) and household appliances, furniture and other furnishings (-3%), while sales of supermarket and grocery products held up (+2.4%), as did vehicle fuels (+26.1%). The electricity and water sector contracted by 1.9%, but the finance, insurance and real estate sector remained resilient, with growth of approximately 1.7% attributed mainly to the strength of the banking sector. Transport, storage and communications grew by 1%, while the small agriculture sector reported expansion of 9.1%.
The CBTT said headline inflation had remained subdued at 3% in September 2016, down from 3.5% in April of the same year. Core inflation, excluding seasonal factors, was 2.3% in September 2016, up from 2.1% in April. Upwards pressure on prices had come from the reduction in diesel fuel subsidies, the expansion of the number of products paying VAT, and the depreciation of the TT dollar, which raised the price of imports. But lower levels of demand and a slackening labour market had offset this. In its March 2017 report, the CBTT reported that headline inflation stabilised in the second half of 2016, measuring 3% y-o-y in December 2016. The bank attributed this to the dampening effects of slowing economic activity minimising the inflationary effects of fiscal measures.
Labour & Productivity
Labour market data from 2016 show the recession was beginning to have an impact. Unemployment rose to 4.4% in the second quarter of 2016, up from 3.2% in the same year-earlier period. In the year to June 2016, 16,200 persons could not find work, while 8200 had left the workforce, reducing the participation rate – labour force as a proportion of total population aged 15 or over – to 60% from 61% previously. Job losses had been most marked in distribution, construction and agriculture. However, there were net increases in the number of people employed in transport, storage and communications, and finance, as well as in community, social and personal services.
The CBTT said the number of people laid off, known as retrenchments, in the five months to September was 741, compared to 495 in the same period of 2015. Labour demand also seemed to be slackening, with jobs advertised down by 30%. There were also signs of falling labour productivity. The index of productivity – the production index divided by hours worked – dropped on a y-o-y basis every quarter in 2016, ending the year down by 3.7% on last quarter of 2015, with a peak drop of 11.4% in the second quarter of 2016.
The CBTT also monitored central government fiscal performance. Based on revised estimates for FY 2016, the government had a deficit equivalent to TT$7.3bn ($1.1bn), or 5% of GDP. This was a significantly worse outcome than was forecast in the original budget for that year, which envisaged a deficit of some TT$2.8bn ($418.4m), or 1.5% of GDP. Stripping out the energy sector, however, there were some signs of improvement. The non-energy central government deficit in FY 2016 was 9.4% of GDP, down from around 13.7% of GDP earlier in the year.
In FY 2017 the CBTT said the new target was to reduce the deficit to TT$6bn ($896.5m), or 3.9% of GDP, a target which among other things depended on realising one-off asset disposals totalling TT$9.7bn ($1.4bn). It also noted that the government had fixed longer-range targets, such as balancing the budget by FY 2020, and limiting public sector debt to no more than 65% of GDP. By the CBTT’s calculation, taking account of the necessary borrowing to cover the fiscal deficit, total public debt in FY 2017 would reach 60.2% of GDP.
The external accounts deteriorated as a result of the oil and gas price shock. The CBTT estimated that there was an overall balance of payments deficit of $412.8m in the first half of 2016, which was nevertheless an improvement on the $724.6m deficit of the same period the preceding year. By the end of June 2016 foreign currency reserves had fallen to $9.375bn, equivalent to 11.1 months’ worth of imports. The current account deficit widened in the first six months of 2016 to 9.7% of GDP or $1.08bn, compared to 2.4% of GDP or $282.9m the year earlier. Most of this was explained by deterioration of the merchandise trade balance. Both energy and non-energy exports did poorly. In the first half of 2016 energy exports declined by 28% y-o-y to $3.1bn. Disappointingly, despite government effort to promote export diversification, non-energy exports also declined by 20% to reach $884.5m. Imports declined by 6.5% during the first half of the year.
The economy’s performance – and its position in the business cycle – is open to a degree of interpretation. Garvin Joefield, head of the economic intelligence unit at Republic Bank, said he thought the 6.7% drop in GDP in the first half of 2016, as measured by the central bank, could reduce in intensity during the second half of 2016, due to the seasonal boost to consumer spending caused by the run-up to the Christmas holidays, and to some increased public works ahead of the late 2016 local elections. Full-year GDP contraction was estimated by the CBTT to fall to 4%, which would still be a deeper drop than the 2.3% contraction forecast by the CSO. The disparity between the central bank’s and CSO’s numbers reflected differences in data collection methodology. Of the two, the CSO annual series was regarded as the more robust, covering more sectors of the economy.
Joefield had some worries about the budget, such as whether the government would be able to carry out its planned one-off asset sales with the speed required. As for the overall position, he told OBG, “For me the economy right now isn’t terrible; I’d say it is challenged for two reasons. The first is that our main revenue stream comes from the energy sector and energy prices are in the doldrums. We can’t expect a major turnaround in those prices for another two-to-three years. And the second reason is that we don’t have another economic activity that, in the short term, could take up 40%, 30% or even 15% of the slack left by energy.” He saw both manufacturing and tourism as key areas of diversification, but neither was yet big enough to offset the energy slowdown. Manufacturing had consistently represented 8-10% of GDP, less than one-third of energy’s 34%. And while there was important spare capacity in the sector, to put it to use would require the rapid development of new export markets – a difficult challenge.
Upturns in T&T usually come through higher energy prices and revenues that lead, via improved taxation receipts, to increased government spending. But this might not happen as quickly as desired this time around. One link in the chain is missing: due to accelerated capital depreciation rules, BPTT, the owner of the Juniper field, would not be making any significant tax payments in FY 2017/18 as outlined in the budget.
The anticipated rise in the energy sector’s fiscal revenues might therefore not happen until 2018, or even later, therefore delaying the recovery. Marla Dukharan, group economist for the Royal Bank of Canada, Caribbean, was also somewhat concerned that the discussion of the various economic diversification strategies, including developing an international financial centre, boosting the marine repair sector or developing creative industries, sounded impressive but that there was insufficient activity taking place.
The authorities are facing several economic management issues. The loss in government energy revenues is critical: they dropped from an average of TT$27bn-28bn ($4bn-4.2bn) after 2006 to TT$19bn ($2.8bn) in 2015 and TT$9bn ($1.3bn) in 2016.
This forced the government to face two simultaneous priorities: fiscal consolidation and economic diversification. The administration has taken hard decisions – for example, taking 7000 items off the zero-rated VAT list – but faced two major constraints. One was militant trade union opposition to austerity and job losses, the other was the need for special majorities – two-thirds or three-fifths of the members of Parliament – to back necessary legislative reforms. As an example of the first, state-owned oil company Petrotrin had been unable to convince its labour unions to accept any reductions in staffing during 2016 despite very high financial losses. In the case of the latter, government plans to create a unified revenue authority, which might help reduce a tax evasion rate of some 40%, requires a special majority in Parliament and was being blocked by the opposition.
In April 2016 US-based ratings agency Moody’s downgraded T&T’s sovereign credit from “Baa2” to “Baa3” with a negative outlook. Moody’s said there were two key drivers for the downgrade. First, that low oil and gas prices would negatively and materially undermine the country’s financial strength in the period running up to 2018. Second, that the policy response would not be as timely or as effective as needed, due to a lack of macroeconomic data and weak policy execution capacity. Moody’s also highlighted a risk that state-owned Petrotrin might require more government financial support than anticipated.
The agency noted that the oil, gas and petrochemicals sector normally accounts for 91% of exports and 35% of GDP. Even before the collapse in oil prices, production had been affected by maturing fields and gas supply disruption. It estimated GDP would drop by 2.5% in 2016, with growth in 2017-18 remaining subdued at around 1% per annum. Oil and gas taxes and royalties had decreased from 15.4% to 10.9% of GDP in FY 2015, and would drop further to 3% of GDP in FY 2016. The fall in oil and gas revenues would therefore represent around eight percentage points of GDP in FY 2016, and the government was seeking to raise an equivalent amount through one-off measures such as asset sales, higher dividends from the National Gas Company and through tax increases. Overall, Moody’s believed that significant fiscal consolidation efforts would be required to keep the government deficit under control.
Moody’s questioned the ability of the government to carry out the necessary fiscal adjustment, pointing in particular to the low quality of available statistical information. This, it suggested, meant the government response might be neither timely nor sufficient. It argued that the government lacked the necessary tools to carry out sensitivity analysis of the impact of oil and gas price movements on its finances, or to assess the impact of earlier changes to VAT. However, Moody’s also said that it would consider an upward ratings review if evidence emerged of a stronger fiscal and economic policy response.
A year later, in April 2017, Moody’s downgraded the country’s issuer rating again, to “Ba1” (considered junk bond status) and changed its outlook from negative to stable. The downgrade was based on several factors. First, the authorities’ policy response has been insufficient to effectively offset the impact of low energy prices on government revenues. Second, a steady rise in debt ratios driven by large government deficits has eroded fiscal strength. And third, that declining production from maturing oil and gas fields coupled with limited investment prospects, in a context of low energy prices, have materially undermined medium-term growth prospect. The ratings agency also stated that T&T’s stable outlook was the result of asset sale proceeds and dividends from the National Gas Company, as well as drawdowns from the Heritage Stabilisation Fund, which would help finance the deficit, slowing the rise of debt levels. Moody’s further said it would consider moving the outlook to positive if it concludes that fiscal consolidation will likely lead to lower fiscal deficits in 2018-19, and stabilise government debt ratios faster than currently anticipated. “The emergence of a fiscal and economy policy response that proves effective in containing the deterioration in government debt metrics would be supportive of a rating upgrade,” the agency stated. Using broadly the same rationale, Standard and Poors also downgraded T&T’s rating, from “A”- to “BBB+” (remaining at investment grade). Marla Dukharan, economist at RBC in the Caribbean, told the research firm Global News Matters that the most concerning consequence of the downgrades could be that the government may “…face higher borrowing costs, at a time when the public sector is already running a primary fiscal deficit”.
Despite challenges including depressed international energy prices as well as rising debt and fiscal imbalances, the T&T recession is likely to bottom out in 2017. The IMF forecasts the economy will grow by 0.3% in 2017 and 3.4% in 2018. The recovery is expected to come via a small rise in energy prices, the inauguration of the BPTT Juniper gas field in 2017 and an expected rise in public sector construction activity, particularly in the affordable housing sector. Achieving that modest growth rate would depend on the government being proactive in pushing forward with public works and house building. RBC Financial’s Dukharan said that while there are signs of growth in the energy industry, weaknesses in non-energy sector may outstrip any uptick seen in hydrocarbons. The arrival of new gas from the Juniper field in late 2017 alongside the expected moderate increase in international energy prices from a low base would provide some stimulus, but, she told OBG, she had doubts over its strength. “It will be an offshore boost measured in terms of foreign direct investment and the balance of payments and the energy sector component of GDP, not something that will have a strong onshore multiplier effect.”