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Monday, July 21, 2025

Central Bank bulletin: T&T economy contracts 5.2%

by

20160917

The Cen­tral Bank yes­ter­day es­ti­mat­ed that the T&T econ­o­my con­tract­ed by 5.2 per cent in the first quar­ter of 2016, com­pared with the same quar­ter in 2015, as a re­sult of a 9.1 per cent de­cline in the en­er­gy sec­tor and a 2.8 per cent de­cline in the non-en­er­gy sec­tor, ac­cord­ing to the Ju­ly 2016 Eco­nom­ic Bul­letin, which was re­leased yes­ter­day.

The in­for­ma­tion on the per­for­mance of do­mes­tic eco­nom­ic ac­tiv­i­ty comes two weeks be­fore the pre­sen­ta­tion of the 2017 Bud­get by Fi­nance Min­is­ter Colm Im­bert and is based on the Cen­tral Bank's In­dex of the Quar­ter­ly Gross Do­mes­tic Prod­uct (GDP), which is based on in­di­ca­tors of pro­duc­tion rather than on val­ue added.

Ac­cord­ing to the Cen­tral Bank, the sharp slow­down in the T&T econ­o­my, as well as sig­nif­i­cant­ly low­er crude oil and nat­ur­al gas prices, led to a wors­en­ing of the Cen­tral Gov­ern­ment's fis­cal ac­counts for the pe­ri­od Oc­to­ber 2015 to June 2016.

"The Cen­tral Gov­ern­ment deficit rose to $6.2 bil­lion (an­nu­alised 4.6 per cent of GDP) over the first nine months of the fis­cal year, com­pared to $2.2 bil­lion in the cor­re­spond­ing year-ear­li­er pe­ri­od," the bank said.

The doc­u­ment al­so re­vealed that the Gov­ern­ment has bor­rowed $11.3 bil­lion so far this year, with $4.66 bil­lion be­ing raised on the lo­cal mar­ket and US$1 bil­lion ($6.7 bil­lion) on the in­ter­na­tion­al cap­i­tal mar­ket.

The US dol­lar bond, which was is­sued in Au­gust, took the coun­try's for­eign debt as a per­cent­age of GDP to 13.6 per cent and pub­lic sec­tor debt to a pro­ject­ed 54.3 per cent of GDP for 2016, from 45.6 per cent last year, the Cen­tral Bank stat­ed.

But the bond, which was arranged by Deutsche Bank and ma­jor­i­ty state-owned First Cit­i­zens, boost­ed T&T's for­eign re­serves to US$10.3 bil­lion at the be­gin­ning of Au­gust 2016, which rep­re­sent­ed 11-and-a-half months of im­port cov­er.

Of the 2017 Bud­get, the Cen­tral Bank stat­ed: "If en­er­gy prices do not re­cov­er sub­stan­tial­ly, the up­com­ing bud­get for fis­cal 2017 will con­tin­ue to em­pha­sise ex­pen­di­ture re­straint.

"On the rev­enue side, the op­er­a­tional­i­sa­tion of pre­vi­ous­ly an­nounced mea­sures may be fleshed out, for ex­am­ple the prop­er­ty tax and the tax on in­ter­net pur­chas­es."

In terms of the out­look for the T&T econ­o­my, the Cen­tral Bank said: "Do­mes­ti­cal­ly, against the back­drop of low­er glob­al en­er­gy prices, a re­duc­tion in lo­cal en­er­gy pro­duc­tion and a stream­lin­ing of Cen­tral Gov­ern­ment ex­pen­di­ture, growth may be fur­ther chal­lenged."

Drilling down in­to the per­for­mance of the econ­o­my, the Cen­tral Bank con­clud­ed that T&T's en­er­gy ex­plo­ration and pro­duc­tion sub-sec­tor de­clined by 10.3 per cent dur­ing the first quar­ter of 2016. And LNG out­put plum­met­ed by 17.9 per cent as a re­sult of re­duced nat­ur­al gas pro­duc­tion.

Mean­while, the un­der­per­for­mance of the non-en­er­gy sec­tor was large­ly as­so­ci­at­ed with a de­cline in ac­tiv­i­ty in the con­struc­tion (15.7 per cent), man­u­fac­tur­ing (6.3 per cent) and elec­tric­i­ty and wa­ter (1.9 per cent) sec­tors, ac­cord­ing to the Cen­tral Bank.

Re­flect­ing on the sharp re­duc­tion in ac­tiv­i­ty in the con­struc­tion sec­tor, the Cen­tral Bank at­trib­uted the 15.7 per cent de­cline to the fact that: "Work on ma­jor pub­lic sec­tor con­struc­tion projects has been im­pact­ed by the ad­min­is­tra­tive re­view of the Pub­lic Sec­tor In­vest­ment Pro­gramme as well as mo­bil­i­sa­tion chal­lenges."


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