Home' Trinidad and Tobago Guardian : August 6th 2015 Contents AUGUST 6 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
The economy is expected to see a
short-term boost from increased pub-
lic spending in the run-up to the gen-
eral elections, scheduled for Septem-
However, the outlook beyond the polls is less easy
to predict, injecting a dose of uncertainty into long-
term economic forecasts, amidst speculation over
the prospects of further fiscal consolidation to address
While T&T enjoys one of the highest standards of
living in the Caribbean, it has recorded sluggish
growth in recent years, a situation compounded by
the sharp fall in hydrocarbons prices. Although natural
gas accounts for nearly three-fourths of its energy
revenues, oil-indexed gas contracts have also been
hit by weaker prices.
According to the latest report from the Central
Bank, the economy grew by 0.9 per cent in 2014.
This follows a contraction in both 2010 and 2011, a
small recovery in 2012 and a rebound to growth of
2.1 per cent in 2013. The latter was largely due to the
performance of the non-oil sector, with financial
services, manufacturing and construction all recording
The CBTT s outlook for this year is "relatively pos-
itive", with many analysts cautiously optimistic.
Nonetheless, growth estimates are varied.
The IMF forecasts 1.2 per cent and 1.5 per cent
growth in 2015 and 2016, respectively, with inflation
expected to reach 7.3 per cent this year before easing
to 5.7 per cent in 2016.
The Royal Bank of Canada, however, predicts a
more sombre 0.5 per cent contraction this year and
5.5 per cent inflation in its regional economic report
Public sector finances also remain an issue. The
current administration expects the country s fiscal
deficit to reach 1.5 per cent of GDP this fiscal year,
despite austerity measures imposed in response to
last year s decline in hydrocarbons prices.
This means the new government will need to con-
sider additional belt-tightening measures to stop the
deficit from widening further.
"The new government must initiate politically
unattractive but durable fiscal reforms within the
first two years of coming into office," the CBTT s
governor, Jwala Rambarran, said in June, calling for
reductions in fuel subsidies and other structural
adjustments to address the country s recurrent deficits.
Weaker oil prices could provide some breathing
room to help accomplish the former, while greater
fiscal consolidation could be achieved by tightening
value-added tax collection and addressing redundant
social programmes, Rambarran said.
The battle between the ruling People s Partnership
(PP) coalition and the People s National Movement
(PNM) promises to be a lively and closely run affair.
With few fundamental differences in economic policy,
both have sought to encourage private sector invest-
ment while increasing public spending and introducing
several job-creation schemes to maintain full employ-
Regardless of the outcome, the election cycle itself
is expected to give the economy a short-term boost.
"Election-related expenditure should ... provide
impetus for distribution, advertising and transport,"
according to an economic newsletter published in
March by Republic Bank.
The healthcare and construction sectors, in par-
ticular, are likely to benefit from higher public spend-
ing, with a children s hospital opening in Couva and
construction starting on medical facilities in Arima
and Point Fortin.
External factors also bode well for growth in certain
areas in the near term. Cheaper fuel and the broader
global economic recovery could drive tourism receipts
and demand for manufactured goods, according to
Marco Binenti is Oxford Business Group's editorial
manager for T&T. Oxford Business Group is a
global publishing, research and consultancy firm,
which publishes economic intelligence on the mar-
kets of the Americas, Asia, Middle East and Africa.
T&T looks beyond polls
for economic outlook
Oxford Business Group
The IMF forecasts 1.2 per cent and 1.5 per cent growth in 2015
and 2016, respectively, with inflation expected to reach 7.3 per
cent this year before easing to 5.7 per cent in 2016.
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