ANDRE WORRELL
A report from First Citizens Investment Services (FCIS) says many of the unresolved economic issues of 2016 are likely to remain at the fore in the new year, posing challenges to any major economic recovery for T&T.
In the report released on Friday, the investment company provided an analysis of the economic issues that confronted T&T in 2016, while looking forward to the scenarios likely to take place in 2017.
"The spillover risks of 2016 coupled with the some of the new challenges which 2017 will bring will result in a relatively benign economic environment," FCIS said, adding that 2017 will be "another challenging year with significant downside risks."
The investment firm said T&T has long been "the Caribbean's star performer" but the country "now faces a severe and protracted commodity price shock."
Highlighting some of the specific issues of the past year, the report said: "There were several economic themes that pervaded during the past 12 months in particular. The economy continued its contraction, fiscal accounts went deeper into the red, debt levels rose, labour market conditions deteriorated, foreign exchange reserves declined amid the continued tightness in the foreign exchange market and country's credit rating came under pressure."
Focusing on labour issues, FCIS said a strained industrial relations environment is likely to persist into the new year, most prominently in the energy sector.
"In 2016, labour market conditions worsened and from early indications, this trend is likely to continue into 2017, particularly in the energy sector. As a result of this and the build-up of other industrial relations issues in various sectors, we can expect a lot of unrest on the labour front.
"The Oilfield Workers Trade Union (OWTU) is already threatening protest action at the country's state-owned Petrotrin if negotiations are not settled even in an environment of low and volatile oil prices" the report said.
FCIS noted that foreign exchange reserves spiked in August as a result of the successful execution of a US$1 billion bond on the international capital market. However, reserves have been in decline ever since as a result of heavy demand in the domestic market for foreign exchange, falling by five per cent in the three month period.
"In the 12 months to November 2016, the country's net official reserves fell by just under one per cent to US$9.5 billion," the company said.
The investment firm said T&T's economic outlook remains tied to the energy sector, with other variables likely to have some measure of influence on economic activity.
"Economic prospects are highly dependent on several key developments, particularly in the energy sector. This uncertain outlook, a still bearish global energy market, coupled with a deteriorating labour market and the spiraling crime situation may continue to cloud the outlook for Trinidad and Tobago over the next 12 months," the company said.