Country Report Trinidad and Tobago September 2009

Summary

The already low popularity of the prime minister, Patrick Manning, will be eroded further by the economic downturn and rising levels of violent crime.
Although adverse economic conditions will create policy challenges for Mr Manning's administration, his party's parliamentary majority will avert the threat of legislative gridlock.
Owing to the impact of the global recession, real GDP will contract by 2.7% in 2009, the first recession since 1993. A mild global economic recovery will help to lift GDP growth to a still-weak 1.2% in 2010.
Inflation will continue to fall in the remainder of 2009, to a year-end rate of 4.4%, but supply-side bottlenecks and higher global commodity prices will again raise inflationary pressures in 2010.
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.

Recessionary economic conditions, worsening crime and poor healthcare have lowered the public approval ratings of the People's National Movement (PNM) government to under 30%.
The opposition United National Congress (UNC), whose leader, Basdeo Panday, also received low approval ratings, has continued to fracture. A UNC dissident, Jack Warner, has bankrolled an effort to force Mr Panday to retire.
The government failed to meet its twice-revised budget targets in 2008/09 (October-September), revealing an estimated fiscal deficit of 6.3% of GDP (well above its target of 1.3%) in the 2009/10 budget speech in early September.
The 2009/10 budget projects another large budget deficit (5.3% of GDP) as both revenue and expenditure are expected to continue to fall in nominal terms.
The government may draw down on some of its Central Bank deposits??