Washington – The International Monetary Fund (IMF) on Friday said Trinidad and Tobago’s economic activity is recovering supported by higher global energy prices and the rebound of the non-energy sector.
It said real gross domestic product (GDP) is estimated to have expanded by 2.5 per cent last year and that inflation has increased, reaching 8.7 per cent by end of 2022, driven by imported energy and food prices, partial liberalization of domestic fuel prices in 2022, and domestic weather-related shocks.
“The financial sector appears well-capitalized, liquid, and profitable. Higher energy prices contributed to further improving the external position in 2022 and turning the fiscal position into a surplus in financial year2022, for the first time in over a decade,” the IMF said following the Executive Board conclusion of the 2023 Article IV consultation.
According to the Washington-based financial institution, the economic recovery is expected to gain broad-based momentum in 2023 and that inflation is projected to slow to 4.5 per cent by end of this year and to continue declining with international prices.
“The current account surplus will narrow in line with the anticipated decline in global energy prices, reaching 6.6 per cent of GDP in 2023. International reserve coverage is expected to remain adequate at around 7.2 months of prospective total imports and is complemented by large public external buffers in the Heritage and Stabilization Fund of about 18.4 per cent of GDP.
“The overall fiscal balance is projected to turn into a deficit of 2.8 per cent of GDP in financial year2023, reflecting lower energy revenues due to declining energy prices and domestic production, and increased capital spending,” the IMF said.
It noted that the balance of risks to the outlook is tilted to the downside.
“Downside risks stem from potential disruptions to domestic oil and gas production; a sharper-than-expected global slowdown affecting energy markets, and global financial instabilities. On the upside, there is the potential for higher-than-expected energy prices and production, including new or expanded projects, and new renewable energy projects.” (CMC)