T
rinidad and Tobago’s economy continues to
gain momentum and is expected to expand
in real terms by 1.9 percent in calendar
2014, following growth of 1.7 percent in 2013. This
outlook is premised on a projected 1.0 percent in
the petroleum sector complimented by a 2.5 percent
expansion in the non-petroleum sector. The services
sub-sector, with 51.8 percent, continues to be the
largest contributor to nonpetroleum GDP.
The energy sector is expected to record its second
Trinidad & Tobago forecasting 1.9 percent real growth for 2014
consecutive year of positive economic growth, with a
smaller expansion of 1.0 percent in 2014, down from
1.6 percent in 2013 and reflecting expansions in the
exploration and production, petrochemicals, service
contractors and distribution sub-industries.
Headline inflation continued its downward trajectory
in 2014, remaining at subdued levels year-on-year for
the first six months of 2014 settling at 3.0 percent by
June following some fluctuations earlier in the year.
Core inflation remained relatively stable throughout
the period, decreasing marginally to 2.5 percent in
June from 2.6 percent in January. Year-on-year,
headline inflation has remained at single digit levels for
23 consecutive months.
Unemployment edged up to 3.7 percent in the fourth
quarter of fiscal 2013, from the previous historical low
of 3.5 percent in the third quarter. In most industries,
with the exception of construction; petroleum and gas;
and wholesale and retail trade, restaurants and hotels,
unemployment rates were below the national average.
With the subdued inflationary environment prevailing
and the continued, albeit weakened, economic growth
of the domestic economy, the Central Bank of Trinidad
and Tobago maintained an accommodative monetary
policy stance, in an attempt at boosting economic
activity. While there has been a small pick-up in core
inflation in the early months of 2014, Headline inflation
has remained under 5 percent. During the nine-
month period October 2013 to June 2014, the bank
kept its main policy rate, the Repo rate, unchanged
at 2.75 percent, while utilizing a number of liquidity
management instruments in an attempt to contain the
high liquidity levels. In response, commercial banks
maintained both their basic prime lending rates and the
interest rate on term loans at 7.5 percent in an effort to
encourage borrowing. The weighted average deposit
rate was also held constant at a subdued 0.2 percent
over the period.
As business lending recovered lending to the private
sector by the consolidated financial system rose by 5.8
percent on a year-on-year basis to March 2014, up
from 3.2 percent in September 2013 and 2.4 percent
one year earlier. Commercial banks’ lending to the
private sector expanded by 6.0 percent in March 2014
compared with 4.6 percent in March 2013.
The composition of the growth in private sector
credit has become more evenly distributed as business
lending recovered in the first quarter of 2014 coming
on the heels of 14 consecutive months of year-on-year
declines. Business loans granted by the consolidated
financial system rose 2.1 percent in March 2014 with
the recovery in business lending being driven by strong
loan growth to the distribution sector of 23.1 percent
and the services sector of 7.9 percent. Consumer credit
by the consolidated financial system continue to expand
by 5.8 percent on a year-on-year basis to March 2014,
manifested by strong growth in housing related loans.
Historically low mortgage rates continued to spur
demand for real estate mortgage loans in 2014 with
the supply of real estate mortgage loans granted by the
consolidated financial system remaining in double-digit
territory.
The Central Bank expanded its liquidity management
framework in December 2013, increasing the
Empowering People through
Sustained Economic Growth
