T&T’s economy is “extremely challenging”, with the country suffering a $35 billion decline in Gross Domestic Product (GDP) between 2015 and 2021, former minister of planning Dr Bhoe Tewarie has said.
Speaking at a webinar last Friday hosted by the University of the West Indies’ (UWI) Trade and Economic Development Unit, entitled “After the Dust has Settled,” Tewarie said the country’s prolonged economic deterioration must be placed in its historical context rather than focusing narrowly on whether the economy had entered a technical recession.
He said the previous government had governed for 10 consecutive years, during which T&T experienced a prolonged period of economic contraction, including seven consecutive years of decline between 2015 and 2021.
“The overall GDP decline was between 19 per cent and 21 per cent over a span of seven consecutive years, or 28 quarters. The GDP fell from $185.7 billion in 2015 to $149.6 billion in 2021, a $35 billion fall in a seven-year period. Now, currently we have about a 17 per cent decline in real GDP.”
Technical recession debate
Tewarie said the country’s economic difficulties could not be attributed simply to the performance of the current administration or the circumstances surrounding individual budget presentations.
He argued that the debate over whether T&T had experienced two consecutive quarters of economic contraction was distracting from the more fundamental question of how the country could restore economic growth, investment, exports and employment.
“This did not happen over two budgets or two quarters. So, I would say we have to get beyond and a little higher than the political talk, because it holds no value. It preserves solutions. And we have been in economic decline and depression, in my view, for the entire lifetime of every single 11-year-old child in this country.”
He said the country’s current economic circumstances were particularly worrying because of declining natural gas production and the difficulties facing the non-energy sector and labour market.
Tewarie pointed to GDP contractions of 1.2 per cent in 2025 and 1.8 per cent in the first quarter of 2026, arguing that the country needed to look beyond the technical definition of recession.
He said the more important challenge was restoring GDP to approximately $186 billion and creating the conditions for sustainable economic expansion.
Among the country’s major challenges, Tewarie identified foreign exchange shortages, high public debt servicing obligations and vulnerability to international energy price fluctuations.
While acknowledging that the Government had introduced measures to increase revenue, strengthen tax compliance and expand social assistance, he said these initiatives did not resolve the country’s underlying structural problems.
He highlighted the absence of meaningful economic diversification, continuing foreign exchange constraints and insufficient investment in non-energy industries.
Tewarie said the current administration had inherited a difficult economic situation and had taken steps to stabilise the economy, but warned that stabilisation should not be confused with recovery.
“The government inherited an awful situation. I don’t think that can be argued against. They have met the challenge and stabilised the economy. But there is no recovery and there is no clear growth path.”
He said the country needed to improve investment, productivity, exports and economic diversification while addressing the challenges confronting the energy sector.
In closing, Tewarie described the country’s economic and political circumstances as particularly difficult.
“The economic climate is extremely challenging. The financial situation, in my view, is equivalent to one of entrapment. And the political climate, in my view, is much too adversarial. It is much too confrontational.”
Small business diversification
Small and medium-sized enterprises (SMEs) must diversify to survive an increasingly difficult economic environment, as declining sales, limited access to foreign exchange and difficulties securing financing continue to place pressure on businesses, chairman of the Confederation of Regional Business Chambers (CRBC), Vivek Charran warned.
“The issue is that SMEs more than ever need to diversify. And in the midst of all of this, there has never been a greater incentive to diversify, other than the fact that your short-term survival and your short-term income, earning potential, perhaps depends on it.”
Speaking at the same event as Tewarie, Charran said that while initiatives were taking place within certain sectors, SMEs were not receiving sufficient attention in the national economic discussion.
He said T&T’s dependence on oil and natural gas had left the economy exposed to a boom-and-bust cycle, with the situation now compounded by concerns about the actual supply of commodities.
Charran identified the role of commercial banks as one of the critical issues requiring greater attention, particularly their willingness to finance businesses seeking to diversify into manufacturing.
He said many SMEs were already carrying substantial debt, including mortgages and outstanding obligations from the COVID-19 period, while lower sales and slower inventory turnover were affecting their financial positions.
“The requirement other than your business plan and so on, most likely, no matter what is being said, comes down to collateral, physical collateral. Collateral is often one and a half times or two times what is the value of your investment to diversify.”
He said this made it difficult for smaller businesses to secure financing, as many had already leveraged whatever assets they possessed. Charran called for alternative financing arrangements to encourage new businesses to enter manufacturing.
He also identified the high cost of commercial land as another major obstacle, particularly for businesses seeking to expand production.
Charran argued that if the country were serious about economic diversification, SMEs would have to play a greater role in expanding manufacturing.
He said established large companies were unlikely to take significant risks by moving into entirely different product lines, making smaller businesses an important source of new manufacturing activity.
Charran also identified agriculture and food processing as areas where SMEs could contribute to import substitution and reduce the country’s food import bill.
He pointed to opportunities in dairy, egg and broiler production, as well as hydroponics and the cultivation of leafy greens.
He said local businesses could develop products for the domestic market before eventually expanding into exports, particularly as supermarkets continued to demonstrate demand for goods.
However, he stressed that businesses needed an enabling environment that reduced the initial cost of entering manufacturing and agriculture.
“The operating costs and the entrance, particularly when it comes to debt financing and when it comes to the cost of land, is where the sticking point is to get into diversification.”
Economic difficulties
T&T is facing one of the most trying periods in its developmental history, with declining economic output, weakening foreign exchange reserves and growing pressure on the labour market requiring urgent policy attention, according to economist Professor Roger Hosein.
“This is not a time where the government of T&T could take things easy. It is a trying moment and one of the most important five-year cycles in our developmental history.”
Speaking at the same webinar as Tewarie and Charran, Hosein said the country’s economic recovery could not depend on the energy sector alone.
He argued that greater emphasis must be placed on non-energy exports, tourism and improving labour force participation, which he said had fallen to 55.1 per cent.
He identified tourism and improvements in labour force participation as two important opportunities for economic development.
“The real bailout factor is likely to come not from energy, but whatever we get from energy, we take it. But really from non-energy exports of goods and services and improvement in the labour market.”
