Lower government revenues following the downturn in global hydrocarbons prices have prompted Trinidad and Tobago to re-evaluate its spending priorities and intensify its efforts to diversify the largely energy-driven economy. Thanks to the country’s strong fundamentals, 2015 is expected to be a recovery year, with the Caribbean Development Bank forecasting expansion of 1.7%, after GDP growth of less than 1% in 2014.
Accounting for 42% of GDP in 2014, 80% of exports from April 2013 to May 2014, and 34.8% of fiscal revenues for the period from October 2013 to September 2014, the energy sector remains the backbone of T&T’s economy. The twin-island nation is the world’s sixth-largest LNG exporter and the largest LNG supplier to the US. It is also the world’s largest exporter of ammonia and second-largest exporter of methanol. While the energy sector has ensured decades of economic growth, dependence on it has also made T&T’s economy vulnerable to commodity price cycles, and the downturn in oil and gas prices since mid-2014 has had a notable impact. In addition to reducing government revenues, lower prices are also prompting a reconsideration of spending priorities and will likely contribute to the acceleration of efforts to diversify the economy. Even so, the country’s low debt ratio, substantial foreign reserves and the momentum provided by major infrastructure projects should ensure stability in 2015 and beyond.
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