Trinidad and Tobago Business Forecast Report Q2 2008

The Success Story Continues...

The Economic Outlook for Trinidad & Tobago Remains Favourable. The Pace of Growth Will Moderate in 2008, to .7% in Real Terms (from An Estimated 7.0% in 2006), as The Effect of Increased Output Is Offset by A Decline in World Prices and Base Effects. While Oil Output Is Gradually Declining, Overall Energy Output Will Continue to Rise over The Forecast Period Thanks to Higher Gas and Methanol Production. Meanwhile, The Political Climate Will Remain Stable following Prime Minister Patrick Manning's Convincing Victory in The 2007 General Elections, Although We Caution That The Government Must Look to Tackle The Problems of Violent Crime and Corruption to Gain Further Public Confidence. on The Business Front, There Is A Pressing Need to Encourage Greater Diversification Away from The Dominant Energy Sector. According to Official Estimates, The Country's Proven Oil Reserves Will Be Depleted by 2020 Assuming No New Discoveries.

We Expect A Period of Relative Political Calm in The Wake of The Resounding Victory for Prime Minister Manning's Ruling People's National Movement in Last Year's Election. in Policy Terms, There Will Be Little Change under A New Government, Although We Do Expect to See A Greater Emphasis on Tackling Crime and Corruption. for All Their Strife, The Two Main Parties Differ Little in Policy Terms and Both Are Committed to The Democratic Rule of Law and Orthodox Macroeconomic Policies.

While The Overall Outlook for Trinidad & Tobago Remains Generally Very Robust, The Economy Is Operating at Full Tilt, and The Resulting Capacity Constraints May Increasingly Come into Play. in Output Terms, The Energy Sector, Accounting for An Estimated 1.2% of Gdp, Will Remain The Engine of Growth in The Forecast Period and beyond. Energy Exports Accounted for 91% of The Value of Total Exports in 2006, Underlining The Country's Heavy Dependence on The Energy Sector. Moreover, Trinidad's Excessive Reliance on The Energy Export Sector Makes It Vulnerable to An Economic Slowdown in The Us.

Trinidad & Tobago's New Business Environment Rating of .7 Puts The Country among The Leaders in The Latin America and The Caribbean Region, and 8th Worldwide. The Country Enjoys A High Investment Grade Rating from The Major Agencies, Which Is Underpinned by Policy Measures to Attract Foreign Investment. Indeed, The Island Group Scores 69.8 in Market Orientation, Some Way above The Caribbean Average of 2.7. However, The Country Performs below Par in The Infrastructure and Institutions Sub-Components of The Ratings, Suggesting That There Is Still Much Room for Improvement.