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 10 Nov 2021

Country Economic Forecast

Trinidad and Tobago

Economist
 We have lowered our 2021 GDP growth forecast to 3.7% from 4.5%, as ongoing
Morgan Ansell international border closures and restrictions are delaying the recovery.
Research Assistant Trinidad and Tobago is still in a state of emergency due to a third wave of Covid
infections, adding pressure to vaccine distribution. Nonetheless, global post-
pandemic demand and the recent oil price boom will contribute to considerable
export growth. Therefore, we expect a current account surplus at end-2021.
Economic diversification will support our medium-term growth forecasts.

 Around 50% of the population have been vaccinated so far, and daily Covid cases
have fallen to around 215 during the ongoing state of emergency. However, vaccine
uptake recently plummeted by 55% in the space of a week. To counteract this
downside risk, the Trinidad and Tobago Non-Communicable Disease Alliance
(TTNCDA) has set up a vaccine hesitancy hotline aiming to provide reliable
information to boost vaccine uptake, thereby supporting the economy’s recovery.

 Given the recent oil price rise, we expect stronger export growth of 19.2% y/y in 2021
The country is still in that will settle to 4.3% y/y in the following years. The prolonged closure of
a state of emergency international airports continues to hurt the tourism sector. The hospitality sector faces
due to a third wave uncertainty due to fluctuating public health restrictions and will therefore depress
of Covid infections investment, which we now forecast to grow by only 2.2% y/y in 2021.

 The government is under pressure to boost medium and long-term competitiveness

and production in the renewable energy sector due to the country’s overspecialisation
into fossil fuels and exposure to climate change, which based on current trends is
expected to shave more than 6.3% off GDP by the end of 2050.

 We expect inflation to remain relatively low at 1.1% in 2021 due to reduced domestic
economic activity, but will pick up to average 2.5% in the medium term.

Global post-
pandemic demand
and the recent oil
price boom will
contribute to
considerable growth
in goods exports

Contact: Morgan Ansell | mansell@oxfordeconomics.com

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Country Economic Forecast | Trinidad and Tobago

Economic Risk Evaluation

Overall risk for Trinidad and Tobago: 4.9/10*
Trinidad and Tobago’s economic risk score of 4.9 has fallen
slightly since April and remains below the regional average of
5.6. The economy faces numerous difficulties that have been
exacerbated by the pandemic, including a reliance on the
turbulent energy sector, lagging infrastructure investment,
and a weak business environment. These factors, combined
with increasing climate change implications, present
significant risks to the country’s economy.

Nevertheless, we expect economic growth will pick up in

2022, fuelled by the recent upward momentum in energy
prices. In the medium term, the major challenges will be
achieving fiscal adjustment and executing more structural
reforms that support economic diversification to reduce
exposure to the energy market. This will put increasing
pressure on policy makers to incentivise renewable energy production.

Market demand: 7/10

The market demand risk score is unchanged at 7 and is still
significantly higher than the regional average of 5.9.

Heavy reliance on the energy sector means that the

economy will remain closely tied to the future path of energy
prices. Investments into economic diversification, such as
the acquisition of a commercial dry-docking facility, will lower
exposure to extreme energy shocks, such as that seen in
2020. The government has introduced several other policies
and reforms aimed at insulating the economy from future
volatility, yet these investments have become a lower priority
due to the pandemic and a significant crime problem.

Market cost: 6/10

The market cost risk score, measuring the risk that costs of
operating in the country will increase, is relatively high at 6,
albeit only marginally higher than the Caribbean average of 5.7.
This partly reflects the high cost of doing business, including
that of trading across borders. The government succeeded in
making taxes easier to pay in 2020 to improve business
competitiveness, although the effect on the market cost risk has
not yet been realised and has likely been subdued by
operational difficulties stemming from the pandemic.

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Country Economic Forecast | Trinidad and Tobago

Exchange rate: 2.9/10

Exchange rate risk has fallen by slightly since April to 2.9 and
is still low compared to the regional score of 4.7. International
price competitiveness has remained steady due to the stable
domestic exchange rate.

Concerns over future FX shortages still affect market

confidence but were slightly soothed by the relatively small
change in 2020. With the reform agenda not fully complete,
the central bank would prefer to maintain the exchange rate
regime.

Sovereign credit: 4.8/10

The sovereign credit risk score has fallen slightly to 4.8 and is
slightly lower than the Caribbean average of 5.1. In our
scoring system, Trinidad’s ranking is held back by its reliance
on energy exports, an accelerated deterioration in the fiscal
situation last year, and banking sector concerns.

Standard & Poor’s rating of BBB- (Stable) is unchanged on

account of increasingly high levels of government debt.
Moody’s rating also remains at Ba1 (negative) and non-
investment grade.

Trade credit: 4/10

Trade credit risk, a measure which indicates businesses’ exposure
to non-payment risks, is stable at 4 and is much lower than
the regional average of 7.1.

The current account is in a surplus following strong growth in

the fuel sector in 2021. We expect the external accounts will
remain in a surplus for the next few years as global demand
improves. However, tourist arrivals will suffer if there is
another wave of the pandemic. If there are any significant
energy price slips, then there is a possibility of a balance of
payments crisis. This would weigh on the terms of trade and
would elevate the risk of non-payment.

* Risk scores are from 1 to 10, with 10 representing the highest risk. For our full country risk service, see
www.risk-evaluator.com. Sovereign credit risk comes from our sovereign risk tool and foreign exchange risk
comes from our FX tool. Find out more.

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Country Economic Forecast | Trinidad and Tobago

Trinidad & Tobago: Real GDP growth Trinidad & Tobago: Inflation
% year % year
16 16
Trinidad & Tobago Latin America
and Caribbean F'cast
12 F'cast 13

Latin America and 10

8
Caribbean

4 7

0 4

Trinidad & Tobago

-4 1

-8 -2
2002 2005 2008 2011 2014 2017 2020 2023 2002 2005 2008 2011 2014 2017 2020 2023
Source: Oxford Economics Source: Oxford Economics

Trinidad & Tobago: Current account balance Trinidad & Tobago: Government budget balance
US$ bn % of GDP
10 % of 50 US$ bn % of GDP
GDP 2.0 US$ mn 10
8 40 (LHS)
F'cast 1.0 F'cast 5
US$ bn (LHS)
6 30
0.0
0
4 20 -1.0
-5
2 10 -2.0
% of GDP -10
-3.0
0 0
-15
-4.0
-2 -10 -20
-5.0
-4 -20 -6.0 -25
2002 2005 2008 2011 2014 2017 2020 2023 2002 2005 2008 2011 2014 2017 2020 2023
Source: Oxford Economics Source: Oxford Economics

Trinidad & Tobago: GDP per capita Trinidad & Tobago: GDP per capita* (US$)
US$ PPP UUS = 100
35,000 50 *calculated using market exchange rates
45
30,000 Trinidad & Tobago LA & the Caribbean Emergers Trinidad & Tobago F'cast
40
25,000 35
30
20,000 Latin America
25 and Caribbean
15,000 20

10,000 15
10
5,000 All developing
5
economies
0 0
2019 2002 2005 2008 2011 2014 2017 2020 2023
Source: Oxford Economics Source: Oxford Economics

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Country Economic Forecast | Trinidad and Tobago

Detailed forecast for Trinidad & Tobago

2019 2020 2021 2022 2023 2024

National Accounts
GDP % year, constant prices -1.2 -7.8 4.5 6.0 4.6 3.1
Consumer spending % year, constant prices 5.2 -9.3 2.9 4.6 3.0 2.6
Gross fixed capital formation % year, constant prices -23.4 -22.4 4.8 3.7 2.7 2.6
Government consumption % year, constant prices 5.4 14.7 -9.3 -9.2 -2.4 1.2
Exports of goods & services % year, constant prices -3.9 -14.1 19.2 11.7 6.7 5.1
Imports of goods & services % year, constant prices -11.7 -17.1 12.6 11.1 7.6 4.8
GDP US$ 2015 bn 22.59 20.83 21.77 23.07 24.12 24.88
US$ bn 23.21 23.12 26.11 29.64 32.86 35.59
US$ PPP bn 37.55 35.03 43.44 49.99 55.69 60.24
GDP per capita US$ 2015 16,200 14,887 15,528 16,421 17,140 17,643
US$ 16,645 16,517 18,624 21,102 23,347 25,239
US$ PPP 26,932 25,031 30,982 35,586 39,566 42,720
Balance of Payments
Balance of visible trade US$ bn 2.73 1.45 3.38 5.14 6.90 8.16
Current account balance US$ bn 1.06 -1.87 -0.73 -0.11 0.66 0.97
% of GDP 4.6 -8.1 -2.8 -0.4 2.0 2.7
Prices
Consumer price index % year 1.0 0.6 0.9 1.0 1.9 2.5
GDP deflator % year -1.0 7.9 8.2 7.1 6.1 5.1
Exchange rates and interest rates
Lending interest rate % 9.25 6.56 7.00 7.75 8.50 9.25
Govt bond yield, long-term % - - - - - -
Exchange rate per US$ Average 6.75 6.75 6.76 6.75 6.76 6.77
PPP exchange rate per US$ Average 4.17 4.15 4.06 4.01 3.99 4.00
External debt
External debt, total US$ bn 7.31 8.07 8.46 8.90 9.31 9.76
% of exports 81.4 133.5 92.8 75.3 64.9 60.3
% of GDP 31.5 34.9 32.4 30.0 28.3 27.4
Effective interest rate % - - - - - -
Effective maturity Years - - - - - -
Debt service % of exports - - - - - -
Interest payments US$ bn - - - - - -
% of exports - - - - - -
Reserves and capital flows
Foreign exchange reserves US$ bn 6.46 6.44 6.50 6.73 7.23 7.66
Import cover, months 12.9 16.5 13.5 12.1 11.7 11.6
Foreign direct investment US$ bn 0.07 -0.76 -0.91 -0.99 -1.05 -1.12
Capital flight, net US$ bn -1.18 0.74 0.97 1.23 1.55 1.55
Government accounts
Government balance LC bn -5.43 -34.65 -20.56 -10.91 -4.40 -0.86
% of GDP -3.5 -22.2 -11.7 -5.4 -2.0 -0.4
Government expenditure LC bn 49.96 67.20 57.72 54.65 54.15 55.76
Government revenue LC bn 44.53 32.56 37.16 43.74 49.75 54.90

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Country Economic Forecast | Trinidad and Tobago

Key Facts
Politics
Head of state: President Paula-Mae WEEKES
Head of government: Prime Minister Keith ROWLEY
Political system: Parliamentary democracy
Date of next presidential election: 2022
Date of next legislative election: 2025
Currency: Trinidad and Tobago dollar (TTD)

Long-term economic & social development

1980 1990 2000 2019*
GDP per capita (US$) 5749 4150 6435 16645
Inflation (%) 17.5 11.1 3.6 1.0
Population (mn) - 1.22 1.27 1.39
Urban population (% of total) 52.3 54.1 55.9 53.2
Life expectancy (years) 66.5 68.1 69.4 73.5
Source : Oxford Economics & World Bank

Structure of GDP by output * 2019 or latest

2019 available year Source : CIA Factbook
Agriculture 1.1% Location: Caribbean, islands between the Caribbean Sea
Industry 43.7% and the North Atlantic Ocean, northeast of Venezuela
Services 55.2% (CIA Factbook)
Source : World Bank

Long-term sovereign credit ratings & outlook Corruption perceptions index 2020
Foreign currency Local currency Score
Fitch Not rated Not rated Developed economies (average) 74.3
Moody's Ba1 (Negative) Ba1 (Negative) Emerging economies (average) 38.5
S&P BBB- (Stable) BBB- (Stable) Trinidad and Tobago 40.0
Western Hemisphere 39.8

Structural economic indicators Source: Transparency International

1990 1995 2000 2019* Scoring system 100 = highly clean, 0 = highly corrupt
Current account (US$ mn) 459 294 544 1056
Trade balance (US$ mn) 1013 588 970 2731
FDI (US$ mn) 109 299 680 272 Composition of goods & services exports 2018

Debt service (US$ mn) 449 420 505 272 0.1%

0.0%
Debt service (% of exports) 19.3 14.4 10.2 1.4
External debt (% of GDP) 49.6 48.7 31.2 31.5
3.0%
50.2%
Oil production (000 bpd) 149.7 131.0 122.0 63.2
Oil consumption (000 bpd) 20.3 21.7 34.1 46.0
Source : Oxford Economics / World Bank / EIA

46.7%
Destination of goods' exports 2020
U.S. 39.0% Agricultural products Fuels and mining products
European Union 9.8%
Manufactures Other goods exports
Guyana 11.0%
Korea 1.2% Other services exports
Other 38.9%
Source : IMF DOTS Source : WTO

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