Latest projections from the Economic Commission for Latin America and the Caribbean (Eclac) are for 0.5 per cent growth in the T&T economy in 2018 based on expansion in the energy sector from stronger upstream gas supply.
The UN agency’s latest report, Preliminary Overview of the Economies of Latin America and the Caribbean 2017, which was released on Thursday, shows that the economy will contract by 2.3 per cent this year—an improvement over the six per cent contraction of 2016.
The report said: “After shrinking by 13.2 per cent in 2016, the mining and quarry sector is expected to contract by 2.2 per cent and to contribute -0.43 percentage points to economic growth owing to declines in crude output.
“The decline in crude oil production is expected to be tempered by an increase in natural gas production in the fourth quarter, stemming from the launch of the Juniper platform.”
In its review of T&T’s economic performance for 2017, Eclac said: “Total revenue fell far short of the original estimates, owing mainly to much lower than expected capital revenue, on account of delays in recovering the money loaned to CL Financial and Clico.
“Despite a small increase in energy sector revenue, total current revenue fell from 28.2 per cent of GDP in fiscal 2016 to 23.9 per cent of GDP in fiscal 2017. Both tax and non-tax revenue decreased, and almost all fiscal subcategories posted declines. Total expenditure fell from 36.3 per cent of GDP in fiscal 2016 to 33.4 per cent in fiscal 2017.
“Increases in wages and salaries and in interest payments were offset by decreases in spending on goods and services, in transfers and subsidies, and in capital expenditure.”
Eclac noted tight conditions in the foreign exchange market, with commercial banks continuing to ration US dollars to customers.
“Between October 2016 and August 2017, the Central Bank injected US$1.725 billion into the foreign exchange market in order to close the gap between demand and supply. Over the same period, the weighted average United States dollar selling rate rose from TT$6.7507 per US$1 to TT$6.7820, which represents a 0.5 per cent depreciation.”
Gross official reserves fell to 10.1 months of import cover by August 2017, down from 10.5 months at the end of 2016 and 11.2 months at the end of 2015.
Eclac said inflation was subdued this year “in line with the economic slowdown”, down from 3.6 per cent in January to 1.2 per cent in September. T
The largest increases were in the health subcomponent of the retail price index, which fell from 18.7 per cent year-on-year growth in January to 12.3 per cent in September.
Unemployment was up slightly from 3.5 per cent to 3.6 per cent which Eclac said was due to ” a significant number of workers leaving the labour force over the period.” The highest unemployment rates were in the electricity and water, construction and manufacturing sectors.