Trinidad and Tobago Business Forecast Report Q3 2008

Publication Date	June 2008
Publisher	Business Monitor
Product Type	Report
Pages	48
ISBN Number	1750-2128
Product Code	BMI01217

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Summary

Time To Diversify? The outlook for Trinidad & Tobago remains generally favourable (we are pencilling in real GDP growth of .7% this year), although we are concerned about the overarching reliance on energy to drive economic expansion. While oil output is gradually declining, overall energy output will continue to rise over the forecast period thanks to higher gas and methanol production, but long-term sustainability remains a thorny issue. Meanwhile, the political climate will remain stable following Prime Minister Patrick Manning's convincing victory in the 007 general elections, although we have yet to see decisive policy action from the government on violent crime and corruption. Inflation, which is teetering on double-digit growth, will remain a major problem this year. As a net importer of food, the country is suffering amid soaring prices for soft commodities.

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 gangs and violent crime. The administration should recover from a spate of financial mismanagement allegations, but we warn that perceptions of corruption continue to rise.

Reducing the non-energy shortfall and expanding the Heritage and Stabilization Fund (HSF) will provide a measure of fiscal sustainability for Trinidad & Tobago. Nevertheless, it will become increasingly difficult for the authorities to prevent a fundamental re-adjustment of the fiscal surplus down to around 2.7% of GDP by 2012, in our view. Looking longer-term, the question of economic diversification away from energy must be given greater policy priority. The government must work to boost its non-energy sector revenue base while keeping its capital expenditure schedule in hand. The most efficient way to achieve this, in our view, is by fostering a more attractive business climate for foreign investment.

Trinidad & Tobago's 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 .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.

Content

Executive Summary
- Time to Diversify?
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Crime and Corruption Pose Key Risks
- While The Exclusion from Parliament of Opposition Leader Basdeo Panday Is Likely to Blow over Soon, The Much
- More Serious Problem of Rising Crime Continues to Provide US with Cause for Concern
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Economy to Remain Healthy in 2008
- Real Gdp Growth Slowed Sharply in 2007 to An Estimated 5.5% of Gdp from A Stellar 12.0% in 2006
List of Tables
- Table: Trinidad & Tobago - Economic Activity
- Fiscal Policy
- Fiscal Focus: Looking beyond Commodities
- An Increasing Reliance on The Energy Sector to Balance The Fiscal Books Remains Our Primary Long-Term
- Concern in Trinidad & Tobago
List of Tables
- Table: Trinidad & Tobago - Fiscal Policy
- Monetary Policy
- More Needed to Curb Inflation
- While Soaring Global Food Prices Can Help Partially Explain The Recent Surge in Retail Price Inflation, Local
- Capacity Constraints, Expansionary Fiscal Policy and Supply Bottlenecks amid Robust Domestic Demand Are
- Also Stoking Latent Inflationary Pressures
List of Tables
- Table: Trinidad & Tobago - Monetary Policy
- Investment Outlook
- Railway Development A Boost for Tourism
- A Project to Build An Extensive Express Railway System on The Island of Trinidad Is Just One of A Number of
- Infrastructure Projects That Should Help Provide A Welcome Boost to The Tourism Industry Going Forward
Chapter 3: Special Report
- Business Outlook for Global Frontier Markets
- Growing Fast on The New Frontier
- The 41 States That Bmi Examines in A New Report on Our Online Service May Make up Only A Small Slice of The
- World Economy, but They Possess Characteristics That Will See Them Gain Importance in The Eyes of Investors
- and Global Businesses over The Coming Years
List of Tables
- Table: Frontier Markets - Key Data and Projections for Top 10 Countries
- Frontier Investment
- Potential and Pitfalls
- The Spectacular Macroeconomic Performance of Frontier Markets in Recent Years Has Been Matched by Mildly
- Successful Efforts to Deepen Capital Markets
List of Tables
- Table: Gdp per Capita, US$ (in Order of % Increase)
- Table: Diversity through Frontier Markets - Correlation Coefficients January 2004-April 2008
- Table: Frontier Market Indices
- Regional Overview
- Laos
- Neighbouring Economies The Key to Growth
- Laos's Gdp Growth Has Been Boosted in Recent Years as Neighbours China, Thailand and Vietnam Compete for
- Its Natural Resources. Gdp Expansion in 2007 Has Been Estimated at 7.6% and We See Annual Growth
- Remaining above 7% for Our Five-Year Forecast Period
- Yemen
- Huge Potential, but Don't Bank on Gcc Membership
- Markets Do Not Come Much More Frontier than Yemen, and, as Would Be Expected, There Is Huge Potential for
- Development, with The Prospect of Eventual Gcc Membership Likely to Act A Key Investment Pull
List of Tables
- Table: Yemen Economic Activity
- Democratic Republic of The Congo
- Mining Industry to Drive Growth
- The Democratic Republic of The Congo's Mining Industry Will Be A Key Driver of Growth and Is Likely to Attract
- Significant Levels of Fdi, with Our Real Gdp Forecasts Standing at 8.3% and 7.9% in 2008 and 2009, Respectively
List of Tables
- Table: Democratic Republic of The Congo - Economic Activity
- Cuba
- Investment Prospects after Fidel The Accession of A New Leadership Structure in Cuba Has Sparked Excitement
- That The 45-Year-Old Trade Embargo with The US May Be Lifted and Cuba May Move toward Market Liberalisation
List of Tables
- Table: Cuba Macroeconomic Data and Forecasts
- Mongolia
- Minerals to Drive Economic Boom
- Mongolia Is in The Midst of A Massive Resource-LED Economic Boom That Should Lift Gdp Growth into The Double
- Digits and Underpin Robust Increases in Exports and Inflows of Foreign Investment Capital over The Long Term
List of Tables
- Table: Mongolia - Economic Activity
Chapter 4: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Introduction
List of Tables
- Table: Bmi Business and Operational Risk Ratings
- Institutions
List of Tables
- Table: Bmi Legal Framework Ratings
- Infrastructure
List of Tables
- Table: Latin America, Annual Fdi Inflows
- Market Orientation
List of Tables
- Table: Bmi Trade Ratings
- Table: Top Export Destination (US$Mn)45
- Operational Risk