Country Report Trinidad and Tobago November 2008

Summary

The parliamentary majority enjoyed by the government of the People's National Movement (PNM) will enable it to enact most of its legislative agenda during the outlook period.
Policymakers are relatively well placed to mitigate any damage to the domestic economy by the global financial crisis, owing to Trinidad and Tobago's sound public finances and a comfortable cushion of reserves.
The government will continue to record fiscal surpluses, driven by the dynamism of the export-oriented energy sector, but these will fall as energy prices drop.
Labour shortages, rather than rising unemployment, will be a near-term challenge for policymakers, but weakening activity in the energy sector in the context of a global recession will dampen GDP growth later in 2009-10.
On the assumption of weaker commodity prices and private consumption, the Economist Intelligence Unit expects inflation to end 2008 at 15%, before easing to an average of 9.7% in 2009-10.
The exchange rate will remain around its quasi-fixed level of TT$6.3:US$1 throughout the forecast period.

The escalation of violent crime under way since 2001 continues. There were nearly 450 murders in the first ten months of 2008, up 40% year on year. Increasingly brazen crimes are being committed in the capital, Port of Spain.
The prime minister, Patrick Manning, has continued to push for a formal association between Trinidad and Tobago and the Organisation of Eastern Caribbean States (OECS).
The government is resisting pressure to revise the 2008/09 budgetwhich was approved on October 10thdespite a sharp decline in world oil prices in recent weeks.
As part of its ongoing effort to contain demand pressures, the Central Bank raised the cash reserve requirement for commercial banks to 17% from 15%, with effect from November 5th, the third such increase so far in 2008.
In contrast to other countries, where food price inflation eased in September, it remained strong in Trinidad owing to flooding and pricing rigidities in the local market. Annual inflation accelerated to 14.8%, up from 13.5% in August.
Although rising prices and low unemployment have been intensifying wage pressures in recent months, a nationwide labour shortage is having a major impact on productivity. Calls for a guest-worker programme are rising.

Source: Country Report

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