Published in CONTACT Magazine
The state of the nation
Speaking to the nation on television and radio in January, prime minister Keith Rowley promised “a slow return to growth” in 2018. The international agencies back him up. In its latest country report for Trinidad and Tobago (November 2017), the IMF projected real GDP growth at 1.9 per cent this year. The CDB’s forecast was 1 per cent; UN ECLAC was less optimistic, forecasting a more conservative GDP growth rate of 0.5 per cent.
The IMF predicted 7.7 per cent growth in the energy sector, thanks to the contributions of Juniper and the Trinidad Onshore Compression Project (TROC). But it thought the non-energy sector likely to contract by 1.2 per cent – cause for concern, as that sector makes up around 65 per cent of GDP, and non-energy export growth is vital for the country’s future.
In estimating energy output for 2018, the IMF put the new norm of natural gas production in the range of 3-4 bcf per day, while oil production was expected to continue its decline, hitting record lows of 60,000-70,000 barrels per day.
Latin America and Caribbean
Overall, Latin America and the Caribbean are expected to see about 1.9 per cent growth in 2018. According to the IMF, growth in Central America has been strengthening; but in the Caribbean, domestic demand is expected to underperform, with growth of 2.3 per cent for tourism-dependent economies and 2.0 per cent for commodity exporters.
In Antigua and Barbuda, Grenada, Jamaica, and St Kitts and Nevis, government debt-to-GDP ratios have been declining, reflective of fiscal discipline and debt restructuring. However, Barbados, The Bahamas, Suriname and Trinidad and Tobago failed to sufficiently address their stubborn fiscal deficits and high debt levels, leading to downgrades by international credit agencies in 2016-17.
According to the IMF, public sector debt remains a major vulnerability for the region. Barbados and Jamaica still have debt levels of over 100 per cent of GDP (102.7 and 109.5 per cent for 2017, respectively). However, they both reduced their debt levels, as did Antigua and Barbuda, Dominica, and St Kitts and Nevis. Declines in commodity prices exposed weaknesses in the fiscal policies of commodity exporters such as Trinidad and Tobago and Suriname, leading to large fiscal deficits and increases in public debt.
The global outlook
In its World Economic Outlook Update for January 2018, the IMF estimated global economic growth for 2018 at 3.9 per cent, a slight improvement of 0.2 per cent over the previous October’s forecast. This continues the global economic trend of steady but modest recovery since 2016.
US and UK
The US economy was projected to grow by 2.7 per cent in 2018 and 2.5 per cent in 2019, following reforms to US corporate and personal income taxes approved in December 2017.
The Brexit aftermath has created much uncertainty over issues like trade and cross-border financial activity, which impacts the growth prospects of the United Kingdom. UK economic growth remains sluggish, and is projected at 1.5 per cent in 2018.
China and Russia
China’s economy is expected to grow by 6.5 per cent, which is an upward revision of 0.2 per cent as a result of a continued expansionary policy.
In an attempt to clear the existing supply glut of oil, both OPEC and Russian-led non-OPEC producers are expected to extend production cuts to the end of 2018. The resulting oil and natural gas production levels are expected to produce a higher-priced environment as 2018 progresses.
As published in the first issue of the rebranded CONTACT Magazine, produced by MEP for the Trinidad & Tobago Chamber of Industry & Commerce. Read the full issue here, which was unveiled at the Chamber’s April 2018 AGM