Country Report Trinidad and Tobago March 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 weaker commodity prices and 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

• A public inquiry into the awarding of state construction contracts through the Urban Development Corporation of Trinidad and Tobago (UDeCOTT), a public company, has revealed evidence of serious mismanagement.
• (UNC-A) is widening. Two UNC MPs, Jack Warner and Ramesh Lawrence Maharaj, are now in open conflict with Basdeo Panday, the UNC leader.
• There were 102 murders by March 1st, up from 67 in the same period of 2008. Most killings continue to be drug or gang-related.
• In late January the government took control of assets belonging to CL Financial Group, one of the Caribbean's largest conglomerates, after financial difficulties prompted concerns over risks to the banking sector.
• Twelve-month consumer price inflation has slowed markedly, falling from 14.5% in December to 11.7% in January as lower global food prices finally began to feed through to retail prices.
• The weakening economic outlook has led to more cautious borrowing from both consumers and businesses. In December, credit growth continued to slow, rising by 14.5% year on year, down from 16.2% in November.

Source: Country Report