Country Report Trinidad and Tobago May 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 7.2% 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 failure of the government to appoint a new Integrity Commission has raised questions about the government's commitment to maintaining independent oversight of the public sector.
• High transfer and subsidy payments boosted central government expenditure in the first five months of the 2008/09 (October-September), resulting in a fiscal deficit of 1.8% of GDP.
• At its April monetary policy meeting, the Central Bank cut its overnight repurchase ("repo") rate by 50 basis points (to 8%) amid growing concerns over the impact of the global economic slowdown on the domestic economy.
• A series of new bills have been introduced in parliament with the aim of improving the regulation of the financial sector, which has been under increased scrutiny since the collapse of a major conglomerate in January.
• The Central Bank warned in April that the economic slowdown is happening faster than previously anticipated. As a result, it has lowered its 2009 real GDP growth forecast to less than 1%.
• Consumer prices have continued to trend downward, but at a slower-than-expected pace. Twelve-month consumer price inflation fell from 11.7% in February to 11.3% in March.
• Low energy and petrochemicals priceswhich remain at less than one-third of peak levels in 2008continue to constrain exploration and production activity in both the upstream and downstream sectors.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22