A Guide to Investing in Trinidad and Tobago (2011) - Ministry of ...

Trade and Investment Approvals and Procedures
Economic Environment
Economic Trends
Since 1994, Trinidad and Tobago’s economy has
continued on a growth path in both the petroleum
and non-petroleum sectors. The economy has successively
been buoyed by the strong recovery in international
oil prices and higher levels of domestic
production, which has boosted government revenue
from the oil sector by over 200% since early 1999. Albeit,
public finances remain vulnerable to fluctuations
in international oil prices, this issue is being rectified
by the development of the downstream industries in
the country.
Economic growth has been driven primarily by the petroleum
sector, which rose by 2.6% in 2009. Despite
this expansion, many local and foreign investors seek
to diversify and expand the non-energy sector in the
country. Energy, however, continues to dominate the
economy.
“Trinidad and Tobago is classified
as a high income country by the
World Development Report of the
World Bank.”
In addition to price and exchange rate movements,
institutional factors also affect country competitiveness.
The Global Competitiveness Report (GCR)
published annually by the World Economic Forum
ranks countries on a number of factors to determine
their competitiveness: basic requirements,
efficiency enhancers and innovation and sophistication.
These three (3) indices are further divided
into twelve (12) pillars. Trinidad and Tobago ranked
84th out of 139 countries in the 2010-2011 report.
Trinidad and Tobago is classified as a high income
country by the World Development Report of the
World Bank. Trinidad and Tobago’s economy was expected
to grow in real terms by 2.5 percent in the
year 2010, and the country is now ranked 59th in the
Human Development Index.
Standard and Poor’s Ratings Services adjusted its
Domestic Rating for Trinidad and Tobago from stable
in 2009, to a positive A+. The country’s foreign rating
maintained a flat A in 2010.
Key Economic Indicators
Trinidad and Tobago recorded an unemployment rate
of 5.8 percent in the period January - June 2010. In
the first quarter of 2010, the unemployment rate increased
to 6.7 percent, up from 5.0 percent in the
first quarter of 2009. Although the labour force declined
by 15,400 persons in the first quarter of 2010
when compared to the same period in the previous
year, this was insufficient to offset the increase in the
number of persons unemployed. Overall, total employment
contracted by 24,700 persons from the first
quarter of 2009 to the first quarter of 2010. Over this
period the participation rate decreased from 63.6 percent
to 61.9 percent.
Headline inflation is expected to slow to an average of
7.0 percent in 2011 following the substantial escalation
of 13.4 per cent in December of 2010. Efforts
to boost domestic food supplies in 2011 should help
to limit food inflation. The increase in headline inflation
in 2010 was mainly attributed to the escalation
of food prices, which increased on a 12 month basis
from 12.7 percent in April 2010 to 39.1 percent in August
2010. The rate of food prices however, slowed to
29.2 percent in September 2010. Nevertheless, core
inflation, which excludes food prices, has remained
relatively stable since the start of 2010.
Table 1: Growth in Real GDP, 2006-2011
(percentage increase / decrease)
Year Projection
‘06 ‘07 ‘08 ‘09 ‘10 ‘11
Real GDP 12.2 4.8 2.4 -3.5 2.5 2.3
Energy 21.4 1.7 -0.2 2.6 2.8 3.2
Non-Energy 6.6 7.6 4.2 -7.2 0 1.9
Construction 4.3 8.9 3.1 -0.2 -9.0 -
Manufacturing 9.4 14.9 5.2 -5.6 3.0 -
Agriculture -0.9 2.6 10.7 -7.6 -19.2 -
Distribution 21.2 3.3 9.8 -15.8 -3.9 -
Services 1.2 10.9 3.2 -7.9 -0.8 -
Source: Ministry of Finance - Review of the Economy;
Central Bank of T&T - Economic Bulletin
Balance of Payments
Trinidad and Tobago’s balance of payments recorded
a surplus of $459.3 million for the first six (6) months
of 2010, compared with a deficit of $578.1 million
over a similar period one year earlier. The current account
surplus of just under $2 billion represented 15.6
per cent of GDP and is closely linked to the recovery
in energy and petrochemical prices. The capital
account continued to be in deficit as private sector
outflows reached $1.8 billion and foreign direct investment
flows remain subdued. At the end of June 2010,
gross official reserves amounted to $9,110.9 million
or 13.1 months of prospective imports.
A Guide to Investing in Trinidad and Tobago (2011) 15
Section 4