Hostilities in the Middle East cast a giant shadow over the global economy. IMF managing director Kristalina Georgieva has warned that the war in Iran is “permanently scarring” the global economy, driving up inflation and slowing global growth due to damage to energy infrastructure and supply chain disruptions. The outlook for global growth depends on how quickly the hostilities in Iran end. The longer the fighting persists, or the Hormuz Strait remains blockaded by either Iran or the United States, the worse the economic outlook.
During an interview at the IMF Spring Meeting in Washington last week, Finance Minister Davendranath Tancoo said that global instability, including conflict in the Middle East, is accelerating Trinidad and Tobago’s economic recovery. He called these events a “mixed blessing” because they increased government revenues from the energy sector beyond budget estimates. However, the minister warned that the same global pressures could drive inflation by raising shipping costs and import prices.
The National Gas Company (NGC) financial results over the past five years show the impact of global energy prices. In 2025, profits reached $3.285 billion, the highest in a decade. In contrast, there was a loss of $4.2 billion in 2019 as performance was hit by one-off adjustments from the COVID-19 shock and the energy market collapse. Profits rebounded to $2.6 billion in 2021 and $2.3 billion in 2022, driven by the post-COVID-19 recovery and higher energy prices. Similarly, the improvement in the 2025 financial result is due to similar considerations.
Natural gas production was stable from 2019 to 2025. Changes in NGC’s financial performance were mainly driven by global energy prices, not by higher production or efficiency. Profits peak when energy prices are high and gas supply is adequate, but collapse when prices or volumes fall. This also applies to the Trinidad and Tobago economy. Bearing this in mind, Minister Tancoo’s comments overstate T&T’s economic performance. Neither national output nor productivity has improved markedly. Any recovery is simply due to higher energy prices.
What matters next is how this energy windfall will be used. Perhaps the minister will quantify the improvement during the mid-year budget review. So far, any hope of recovery is pinned on increasing natural gas production, which is expected to come from the Manatee project in mid-2027. Many current drilling projects may also boost gas production. However, this reliance simply deepens the dependence on the energy sector. T&T’s economic history over the past 50 years shows that this dependence leads to repetitive, destabilising cycles of boom and bust.
Public service unions have already claimed any surplus arising from this new cycle to cover outstanding wage settlements for the period 2014 to 2025. These claims will reduce any surplus available for investment in diversification. What matters is how the resulting surplus will be utilised to alter the economy away from reliance on the energy sector, or to fuel consumption expenditure.
This requires greater effort to develop other sectors of the economy and to upgrade the performance of the government machinery to meet the demands of the twenty-first century. Changing attitudes, behaviours, norms, belief systems, traditions, and value systems across the society are difficult but critical to this transformation process. The ongoing brouhaha with Caricom does not send a reassuring signal that our priorities are aligned.
