British High Commissioner Tim Stew
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Economists forecast T&T inflation will fall further
At a forecast growth rate of 2.2 per cent in 2014, and 2.3 per cent in 2015, the T&T economy will see low inflation of 4.5 per cent per year for the next two years, global economists surveyed by Barcelona-based FocusEconomics have said. T&T closed 2013 with 5.6 per cent inflation which was down from the previous year’s 7.2 per cent.
FocusEconomics Consensus Forecasts for Central America and the Caribbean June 2014, released Tuesday (June 17), presents mean averages of projections of economic forecasters surveyed. The average responses in the survey predicted that T&T’s fiscal balance will worsen to -2.3 per cent of gross domestic product (GDP) in 2015, and its current account, as a percentage of GDP, will improve by 9.3 per cent in 2014, before slipping to 8.6 per cent in 2015,
At 2.2 per cent in 2014 and 2.3 per cent in 2015, T&T will have the fourth weakest growth rate in Central America and the Caribbean, economists forecast in the survey said. In the Caribbean in 2014, the economists forecast that only Jamaica with 1.2 per cent, and Puerto Rico with -0.8 per cent would grow slower than T&T. In Central America, only El Salvador’s economy will be slower than T&T’s, growing at a rate of 1.9 per cent in 2014.
T&T is expected to tie with Belize at the 2.2 per cent growth rate in 2014. In 2015, T&T’s growth rate is projected to be better than Jamaica’s with 1.6 per cent, Puerto Rico’s with -0.3 per cent and El Salvador with 2.1 per cent. Belize is projected to grow 2.6 per cent in its tiebreaker from T&T in 2015.
Economists surveyed forecasted T&T’s GDP per capita will rise to US$21,003 in 2015, up from their 2014 estimate of US$19,763. The economists estimated that T&T’s GDP per capita in 2013 was US$18,531. T&T’s GDP per capita will be the highest in Central America and the Caribbean, according to the economists.
Consumption in T&T is projected to increase by 2.7 per cent in 2014 and 3.2 per cent in 2015. Investment in the T&T economy is projected to grow by 4.5 per cent in 2014 and 4.8 per cent in 2015. Investment grew in 2013 by 4.0 per cent, according to the economists surveyed.
The economists see T&T as having unemployment remain stable at 5 per cent in 2014 and 2015. In 2014, they estimate that T&T will have the third lowest unemployment rate in Central America and the Caribbean. Lower than T&T will be Panama with 4.2 per cent (2014) and 4.6 per cent (2015) and Guatemala with 3.3 per cent both years.
The low interest rate environment will persist in T&T in 2014 and 2015. From the 4.8 per cent at which it closed 2013, the average interest rate in T&T will fall to 2.3 per cent in 2014 and 2015, the economists said, making T&T the country with the lowest interest rates in Central America and the Caribbean.
The economists surveyed said they expect the TT dollar to strengthen 0.2 per cent in 2014 and weaken 0.5 per cent in 2015, which was the same level of weakness seen in 2013. T&T’s exports are projected to continue to grow in 2014 by 1.5 per cent, and in 2015 by 2.9 per cent. T&T will therefore have the second weakest export growth in Central America and the Caribbean. Lower than T&T will be only Puerto Rico with 0.8 per cent growth in exports in 2014.
Imports, which according to the economists contracted 0.4 per cent in 2013, are expected to grow 0.9 per cent in 2014 and 1.8 per cent in 2015. T&T will maintain the highest international reserves in Central America and the Caribbean. The economists forecast the country will have 12.4 months of import cover in 2014 and 12.6 months in 2015. The second highest reserves in the Caribbean basin will be held by Haiti at six months of import cover.
The economists also forecast that T&T’s repo rate will slide to 2.25 per cent in 2014 and 2015, from the 2.75 per cent it was in 2013. The economists said the TT dollar is expected to remain stable at $6.46 in 2014 and $6.47 in 2015.