Trinidad central bank says economy showing signs of improvement
The Central Bank of Trinidad and Tobago, CBTT, says economic activity is expected to improve this year, bolstered by activity in both the energy and non-energy sectors.
In its economic bulletin for July, the CBTT said natural gas supplies should continue to benefit from key upstream energy sector projects such as Shell Trinidad and Tobago’s Colibri, DeNovo’s Zandolie and bpTT’s Cassia Compression.
It said non-energy sector performance will be driven by increased business activity and the continued resurgence of consumer demand.
Headline inflation is expected to continue decelerating in the short term, driven by slowing local produce prices barring weather-related shocks to domestic agricultural production, alongside steadying international food prices.
“Similarly, core inflation is anticipated to continue its downward trend as mounting price pressures from late 2022 subside, including the pass-through of higher fuel prices which appears complete,” the CBTT added.
The CBTT said that domestic indicators suggest that there was an uptick in activity in the non-energy sector, while energy sector output was somewhat steady in the first quarter of 2023. It said notwithstanding improvements in liquefied natural gas and methanol output during the quarter, activity in the energy sector was dampened by reduced output of crude oil, natural gas, natural gas liquids or NGLs, ammonia and urea.
On the non-energy side, strengthening business activity and consumer demand led to increased economic activity in the transportation and storage, wholesale and retail trade, electricity and water and construction sectors while activity in the finance and insurance, manufacturing and agriculture sectors was less buoyant.
The bank said that domestic inflation slowed during the first half of 2023, while unemployment conditions improved in the latter half of 2022 and into 2023.
According to the latest available data from Trinidad’s Central Statistical Office, headline inflation slowed to 5.8 per cent in June 2023, from 8.3 per cent in January 2023. Food inflation, generally the most volatile component of headline inflation, decelerated to reach 10.1 per cent in June 2023 from a high of 17.3 per cent in January 2023.
Core inflation fell to 4.8 per cent in June 2023 from 6.1 per cent in January 2023, as price increases in most sub-indices eased.
Meanwhile, Central Statistical Office data highlighted that the unemployment rate slowed to 4.9 per cent in the first quarter of 2023 from 5.1 per cent in the corresponding quarter of 2022.
The CBTT said retrenchment notices, a supplemental indicator of job separation, suggest a year on-year decline of 14.5 per cent in job losses over January to May 2023, particularly in the transportation, communication and storage, personal services and petroleum and other mining sectors.
Central government’s fiscal position remained in surplus, albeit lower than the corresponding period one year earlier. And the fiscal accounts recorded a surplus of TT$88 million in the first nine months of fiscal year 2023, ranging from October 2022 to June 2023, compared with a surplus of TT$3 billion in the same period a year earlier.
Total revenue rose by TT$2.3 billion, while expenditure grew by TT$5.2 billion. Adjusted general government debt outstanding, “which excludes debt issued for sterilisation purposes”, increased to TT$134.6 billion or 68.2 per cent of GDP) in June, from TT$129.7 billion or 66.5 per cent of GDP at the end of September 2022.
The central bank said it sustained its monetary policy stance in support of the domestic economic recovery, and that excess liquidity continued to be managed in order to facilitate the smooth operation of financial markets and to support ongoing credit expansion. Commercial banks’ excess reserves at the central bank increased from a daily average of TT$6.6 billion in March to TT$7 billion in June.
Ample liquidity bolstered private sector credit during the first five months of 2023 as consumer and real estate lending expanded, while business lending growth slowed.
Trinidad and Tobago’s gross official reserves amounted to US$6.46 billion at the end of July, down US$370.9 million from December 2022. “The external accounts therefore registered an overall deficit in the first seven months of 2023. The reserves at July 2023 represent 8.1 months of prospective imports of goods and services,” the CBTT said.