GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

T&T is prepar­ing for a ma­jor eco­nom­ic shift be­tween 2026 and 2027. While the econ­o­my is ex­pect­ed to grow by on­ly 0.7 per cent in 2026, the World Bank fore­casts a strong come­back in 2027, with a re­al GDP growth rate of 3.2 per cent.

This jump marks a sig­nif­i­cant re­cov­ery af­ter a few years of slow­er move­ment, in­clud­ing an es­ti­mat­ed 0.8 per cent in 2025 and a 2.5 per cent peak in 2024.

This was re­leased by the bank yes­ter­day as it al­so shared its re­gion­al eco­nom­ic up­date pre­sen­ta­tion, “Re­con­sid­er­ing In­dus­tri­al Pol­i­cy.”

How­ev­er, look­ing at the wider Caribbean, T&T’s growth is steady but far more con­ser­v­a­tive than some of its neigh­bours, as the coun­try re­mains well be­hind Guyana, which con­tin­ues to lead the re­gion with mas­sive dou­ble-dig­it pro­jec­tions of 16.3 per cent and 23.5 per cent for those same years.

Com­pared to oth­er tourism-de­pen­dent or ser­vice-based economies, T&T’s 3.2 per cent fore­cast for 2027 places it ahead of Bar­ba­dos (3.0 per cent) and The Ba­hamas (1.9 per cent) for that year.

How­ev­er, in the near term (2026), most of its peers, such as St Vin­cent (3.0 per cent) and Grena­da (3.1 per cent), are out­per­form­ing T&T’s 0.7 per cent.

In the bank’s ex­ec­u­tive sum­ma­ry, it out­lined that Latin Amer­i­ca and the Caribbean (LAC) en­tered 2026 with growth still con­strained by long-stand­ing struc­tur­al chal­lenges.

Re­gion­al GDP growth is pro­ject­ed to reach 2.1 per cent in 2026—slight­ly be­low the 2.4 per cent record­ed in 2025—leav­ing LAC once again one of the slow­est-grow­ing re­gions in the world, with GDP per capi­ta bare­ly in­creas­ing.

The bank stat­ed that the lack of im­prove­ment comes with down­ward re­vi­sions in some coun­try pro­jec­tions and re­flects a fa­mil­iar mix of de­mand: pri­vate con­sump­tion re­mains the main dri­ver, while in­vest­ment stays sub­dued amid el­e­vat­ed glob­al and do­mes­tic un­cer­tain­ty and still-re­stric­tive re­al (in­fla­tion-ad­just­ed) fi­nanc­ing con­di­tions.

The bank al­so cau­tioned that progress against in­fla­tion con­tin­ues, al­beit more slow­ly than ex­pect­ed.

In its ab­stract, the bank fur­ther not­ed that growth and qual­i­ty job cre­ation in Latin Amer­i­ca and the Caribbean (LAC) re­main sub­dued amid a chal­leng­ing glob­al en­vi­ron­ment.

In­fla­tion con­tin­ues to de­cline, but mon­e­tary eas­ing has pro­ceed­ed more slow­ly than an­tic­i­pat­ed, non-en­er­gy com­mod­i­ty prices are soft­en­ing, and per­sis­tent fis­cal deficits con­tin­ue to con­strain need­ed in­vest­ment.

In ad­di­tion, the rapid evo­lu­tion of the glob­al trade regime, to­geth­er with height­ened volatil­i­ty in en­er­gy mar­kets linked to the re­cent con­flict in the Mid­dle East, cre­ates high lev­els of un­cer­tain­ty around in­vest­ment, in­fla­tion, and mon­e­tary pol­i­cy, un­der­min­ing medi­um-term growth prospects.

In the chap­ter ti­tled “The State of the LAC Re­gion Growth,” the World Bank stat­ed that LAC’s growth out­look for 2026 re­mains con­strained de­spite slight­ly eas­i­er glob­al fi­nanc­ing con­di­tions and still-sup­port­ive com­mod­i­ty prices, not­ing that the lack of im­prove­ment over 2025 con­ceals weak­er prospects for many economies and im­plies es­sen­tial­ly flat in­come gains per per­son.

Un­der the sub­head­ing “In­fla­tion Mod­er­at­ed, but Cen­tral Banks Re­main Cau­tious,” the bank not­ed that af­ter a force­ful dis­in­fla­tion episode that be­gan in 2022, the pace of in­fla­tion re­duc­tion has slowed as core in­fla­tion—es­pe­cial­ly in ser­vices—has proved per­sis­tent.

“Most LAC economies are ex­pect­ed to bring in­fla­tion back with­in, or close to, tar­gets by 2026–27, but the ‘last mile’ has be­come hard­er as wage-price dy­nam­ics and in­dex­a­tion keep ser­vices in­fla­tion sticky. Ex­ter­nal con­di­tions are mixed: a soft­er US dol­lar has eased ex­change rate pass-through some­what, but glob­al mon­e­tary pol­i­cy eas­ing has pro­gressed grad­u­al­ly and risk ap­petite has re­mained se­lec­tive, leav­ing re­al fi­nanc­ing con­di­tions still tight,” the bank stat­ed.

It fur­ther not­ed that fis­cal deficits re­main stub­born across much of the re­gion, even where pri­ma­ry bal­ances have im­proved, be­cause high in­ter­est pay­ments con­tin­ue to weigh on over­all out­comes and com­press space for pri­or­i­ty spend­ing.

“Pub­lic debt ra­tios have sta­bilised af­ter the run-up fol­low­ing the COVID-19 pan­dem­ic but re­main high by his­tor­i­cal stan­dards, and a re­turn to the low­er lev­els pre­vail­ing be­fore 2020 is un­like­ly with­out stronger po­ten­tial growth and ad­di­tion­al fis­cal con­sol­i­da­tion,” the bank added.