Trinidad and Tobago Business Forecast Report Q3 2009

Publication Date	June 2009
Publisher	Business Monitor
Product Type	Report
Pages	50
ISBN Number	1750-2128
Product Code	BMI03954

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Summary

Global financial and economic headwinds are sweeping through the Caribbean, and are unlikely to leave any of the region's economies unscathed. While Trinidad & Tobago is better placed than most to deal with the global economic storm, the years of double-digit economic expansion are well and truly over. In 2009 and 2010, the government of Prime Minister Patrick Manning will be faced with the double blow of collapsing economic activity (and a surge in unemployment), as well as a soaring rate of violent crime. Indeed, we believe that the authorities are losing the battle against an escalating murder rate, which has surged to one of the highest globally. Despite these challenges, we remain optimistic that the island group's vast natural resource wealth and resilient external defences (the country is still a net creditor, after all) should see it lead a Caribbean recovery once the global dust settles.

The ruling People's National Movement, led by Prime Minister Patrick Manning, will come under pressure to deliver economic and political results to an increasingly sceptical public. Nevertheless, the main opposition United National Congress remains divided by internal bickering and lack of direction, meaning that the government's position is unlikely to come under serious duress this year or next. Manning will be hoping for a sustained bounce in global energy prices, which will, in turn, galvanise the local economy and allow for a speedy recovery, taking attention away from a soaring crime rate and rising perception of corruption.

Our real GDP growth projection of 0.9% in 2009 would mark the slowest pace of expansion since 1993, and well off the 7.8% mean rate of growth enjoyed over the past decade. What is more, with the US economy not out of the woods - and a double dip recession a growing possibility - we cannot at this stage rule out a full-year recession on the islands. As foreign exchange earnings, particularly petro-dollars, dry up, the authorities will have to tighten the fiscal belt over the months ahead, which again could exacerbate downside risks to growth.

Trinidad & Tobago's business environment rating of 53.7 puts the country among the leaders in the Latin America and the Caribbean region, and 58th worldwide. The country certainly has a lot going for it in terms of investment appeal: an investment grade credit rating, natural resource richness and decent education standards, to name a few. There is significant scope for improvement, however. The country's supply constraints and infrastructure bottlenecks were harshly exposed during the surge in global agricultural prices in early 2008. Institutional weakness is also a concern, especially given the spate of high-profile corruption cases in recent years.

Content

Executive Summary
- Economy Applying The Brakes
Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Ratings
- Domestic Politics
- Crime Problem Here To Stay
- With first quarter crime figures already soaring, we believe that 2009 is shaping up to be the bloodiest year on record in Trinidad & Tobago
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Activity
- 16-Year Low For Growth
- Anecdotal data from the early stages of 2009 endorse our view that Trinidad & Tobago's real GDP growth rate will fall to 0.9% this year from 3.5% in 2008 - the worst pace of annual expansion since 1993
- Economic Activity II
- Unemployment To Hurt Economy In 2009
- The construction and services sectors are set to suffer from restrained public financing and slumping global demand in 2009
- Fiscal Policy
- Fiscal Outlook On Red Alert
- Trinidad & Tobago's public finances will not emerge unscathed from the global downturn
- Balance Of Payments
- Current Account Surplus To Halve In 2009
- Despite bumping up Trinidad & Tobago's current account surplus projection to US$3.2bn (12.0% of GDP) in 2009 from US$2.7bn previously, such a performance would still be less than half the estimated US$6.7bn (27.5% of GDP) figure attained last year
- Exchange Rate Policy
- Regional Outlook
- Clouds Form Above Offshore Financial Centres
- Financial services play a vital role in the Caribbean, with many islands developing global Offshore Financial Centres in recent years to reduce their dependence on tourism and agriculture
Chapter 3: 10-Year Forecast
- The Trinidad & Tobago Economy To 2018
- Economic Prospects Looking Good
- In terms of economic growth and development, natural resource-rich Trinidad & Tobago should remain the Caribbean standard bearer over the next decade
Chapter 4: Special Report
- The Outlook For Global Banking
- Business Environment Rating Outlook
Chapter 5: Business Environment
- SWOT Analysis
- BMI Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Infrastructure
- Market Orientation
- Operational Risk
Chapter 6: BMI Global Assumptions
- Global Assumptions
List of Tables
- Table: Trinidad & Tobago Political Overview
- Table: ECONOMIC ACTIVITY
- Table: FISCAL POLICY
- Table: BALANCE OF PAYMENTS
- Table: EXCHANGE RATE POLICY
- Table: TRINIDAD & TOBAGO Long-Term Macroeconomic Forecasts
- Table: LOAN -TO-DEPOSIT RATIOS, Selected States
- Table: LOAN GRO WTH, Selected States
- Table: COMMERCIAL BANKING BUSINESS ENVIRON MENT RATINGS, SELECTED STATES
- Table: BMI BUSINESS AND OPERATIONAL RISK RATINGS
- Table: BMI LEGAL FRAMEWORK RATINGS
- Table: Latin America Annual FDI Inflows
- Table: BMI TRADE RATINGS
- Table: TRINIDAD & TOBAGO TOP EXPORT DESTINATIONS
- Table: GLOBAL ASSUMPTIONS
- Table: GLOBAL & REGIONAL REAL GDP GRO WTH
- Table: EMERGING MARKETS
- Table: COMMODITIES