Country Report Trinidad and Tobago April 2009

Outlook for 2009-10

• The already low popularity of the prime minister, Patrick Manning, will be eroded further by the economic downturn and the worsening violent crimesituation.
• Policymaking will become more challenging in 2009-10, as the deterioration of the fiscal and current-account balances leaves Trinidad and Tobago exposed to global financial and economic woes.
• After slowing in 2008 to 3.5%, GDP growth will weaken further in 2009, to 0.9%, as the global recession bites. A mild global economic recovery will help to lift GDP growth to 1.9% in 2010.
• Supply-side inefficiencies and loose fiscal policy preclude a rapid decline in inflation, but on the assumption of lower commodity prices and weaker private consumption, we expect inflation to ease to an average of 6.9% in 2009-10.
• The exchange rate will remain around its quasi-fixed level of TT$6.3:US$1 throughout the forecast period, supported by a strong reserves position.

Monthly review

• The finance minister, Karen Nunez-Tesheira, was accused of a conflict of interest over her role in the government's bailout of a major conglomerate, CL Financial, after it was revealed that she owned shares in the company.
• The split within the opposition United National Congress (UNC) has deepened. Rival supporters clashed at a party meeting in March, as dissident members continued to call for internal party elections.
• The focus of monetary policy has shifted from containing inflation to boosting economic growth. At its March policy meeting the central bank cut interest rates for the first time since last September, to 8.5% (from 8.75%).
• Fears over a shortage of foreign currency sparked rumours of an impending devaluation of the Trinidad and Tobago dollar in March. The government and the central bank confirmed sufficient reserves to support the currency.
• Annual consumer price inflation remained at 11.7% in February, the same rate as in January. Monthly inflation declined by 0.2%, only the second drop in the past 12 months, as a result of easing food prices.
• Faced with delays in the exploration and production of both oil and natural gas, the government has pledged to review the fiscal terms agreed with energy companies that recently signed Production Sharing Contracts (PSCs).
• Despite the poor performance of the energy sector overall in the first months of 2009, Canadian Superior Energy announced a natural gas discovery at its Endeavour well in March.

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52