Caribbean & Central America - August 2018 (ISSN 1741-4458)

In its latest Article IV consultation, the International Monetary Fund (IMF) reports that the Trinidad & Tobago economy is “slowly recovering from a prolonged recession”, and positive growth of 1.0% is expected in 2018. But there is likely to be a slight slowdown in 2019 (0.9%) rather than any acceleration of the recovery. In 2017, the contraction was -2.6%.

Over the medium term, the IMF is expecting growth to stabilize at an unexciting 1.5%. Furthermore, it sees risks as being “tilted towards the downside”. These risks include lower energy prices and delays in delivering energy-related projects on time. Nevertheless, perhaps optimistically given the lack of any dynamism in the economy, the IMF argues that the “relatively favourable circumstances in 2018 with stronger energy prices and low inflation provide a window of opportunity to establish a medium-term adjustment strategy”.

One of the key adjustments is seen to be “creating an enabling environment for the non-energy sector to be an engine of growth”. The IMF urges continuing efforts to support tourism, and the removal of “obstacles to non-energy growth” which it lists as including air/sea connectivity, the cost of doing business, and access to finance.

Crime, of course, is another drag on the economy. The IMF puts direct crime-related costs from public, private, and social spending at 3.5% of GDP, which is actually about average for the Latin American and Caribbean regions. However, Trinidad’s homicide rate is amongst the highest in the Caribbean.