A new re­port from the Eco­nom­ic Com­mis­sion­er for Latin Amer­i­ca and the Caribbean (Eclac) es­ti­mates that the T&T econ­o­my de­clined by 4.5 per cent this year.

This fol­lows con­trac­tions of 0.6 per cent and 0.5 per cent in 2014 and 2015, re­spec­tive­ly.

Eclac said: "Con­tin­ued nat­ur­al gas sup­ply short­ages, main­te­nance shut­downs and weak en­er­gy prices con­tributed to the en­er­gy sec­tor's de­te­ri­o­ra­tion, while link­ages with that sec­tor pulled down the non-en­er­gy sec­tor.

The cur­rent ac­count deficit widened as a re­sult of re­duced goods ex­ports, while for­eign di­rect in­vest­ment saw a mod­est re­cov­ery.

Ac­cord­ing to the re­port, Gov­ern­ment's fis­cal deficit ex­pand­ed to 4.2 per cent of GDP. In re­sponse, sev­er­al ad­just­ments were made to com­pen­sate for lost en­er­gy rev­enues, in­clud­ing sev­er­al new tax ini­tia­tives.

It con­tin­ued: "In mon­e­tary pol­i­cy, the cen­tral bank re­po rate was left un­changed in 2016 and the ex­change rate against the Unit­ed States dol­lar was al­lowed to weak­en.

Un­em­ploy­ment rose to 4.4 per cent in the sec­ond quar­ter of the year as the slow­down took hold.

Eclac said the es­ti­mat­ed deficit is an in­crease on the 1.5 per cent deficit of fis­cal 2014/2015 and had been orig­i­nal­ly es­ti­mat­ed at 1.8 per cent of GDP but wors­ened be­cause of low­er en­er­gy rev­enue.

"While the gov­ern­ment man­aged to in­crease non-tax rev­enue by 18 per cent–large­ly as a re­sult of re­pay­ment of past lend­ing–tax rev­enue fell by 31 per cent be­cause of a 90.3 per cent drop in the con­tri­bu­tion from oil com­pa­nies.

"The bud­get for fis­cal 2016/2017, which is based on an es­ti­mat­ed oil price of US$ 48 per bar­rel and a gas price of US$2.25 per MMB­tu, pre­dicts a deficit of 3.9 per cent of GDP," the re­port­ed stat­ed.

The re­port not­ed that mea­sures had been im­ple­ment­ed to in­crease rev­enue from oth­er sources, in­clud­ing re­in­state­ment of prop­er­ty tax, a new in­come tax brack­et and a 7 per cent tax on on­line shop­ping.

"As a re­sult of the con­tract­ing econ­o­my, in 2016 the Cen­tral Bank of Trinidad and To­ba­go kept the re­po rate at 4.75 per cent, where it had been since De­cem­ber 2015.

"Al­though the bank raised this rate sev­er­al times over 2015, com­mer­cial banks' av­er­age lend­ing rates de­clined over the year be­fore in­creas­ing by 0.29 per­cent­age points from De­cem­ber 2015 to June 2016," the Eclac re­port con­tin­ued.

" This lag in mon­e­tary pol­i­cy trans­mis­sion may be due to the banks be­ing sup­plied with enough re­sources from ex­cess liq­uid­i­ty in the bank­ing sys­tem with­out hav­ing to ac­cess cen­tral bank re­po fa­cil­i­ties."

Eclac al­so not­ed that the Cen­tral Bank had al­lowed the ex­change rate to "slow­ly de­pre­ci­ate af­ter main­tain­ing a qua­si peg for about 20 years."

"The of­fi­cial Unit­ed States dol­lar sell­ing rate weak­ened by 6.1 per cent be­tween Oc­to­ber 2015 and Oc­to­ber 2016, from TT$6.3627 to TT$6.7507 per US$1.

"As a re­sult of the slow­down in the econ­o­my, the Cen­tral Bank sold 44 per cent less for­eign ex­change to au­tho­rised deal­ers be­tween Jan­u­ary and Oc­to­ber 2016 than in the same pe­ri­od the pre­vi­ous year.

"How­ev­er, for­eign ex­change re­mains scarce, and many banks have re­sort­ed to ra­tioning Unit­ed States dol­lars to cus­tomers."

Eclac said ef­fect of the eco­nom­ic slow­down has man­i­fest­ed in the econ­o­my's labour force sta­tis­tics.

The un­em­ploy­ment rate rose from 3.5 per cent in the fourth quar­ter of 2015 to 3.8 per cent in the first quar­ter of 2016 and then to 4.4 per cent in the sec­ond quar­ter.

"Un­em­ploy­ment in the oil and gas sec­tor, which had in­creased to 8.3 per cent by the fourth quar­ter of 2015, fell to 3.1 per cent in the sec­ond quar­ter of 2016, large­ly be­cause of work­ers leav­ing the sec­tor.

"In the most re­cent es­ti­mate, un­em­ploy­ment was high­est in the con­struc­tion sec­tor (8.6 per cent) and low­est in the agri­cul­ture sec­tor (1.0 per cent)."