Trinidad and Tobago’s local economy bruised by COVID-19

The Central Bank of Trinidad and Tobago (CBTT) says the coronavirus (COVID-19) has adversely affected the short-term economic outlook of the country “perhaps for the whole of 2020 depending on how the situation evolves”.

The Central Bank of Trinidad and Tobago in Port of Spain.

In the May edition of its Monetary Policy Report, the CBTT said that the necessary containment measures have already affected the non-energy sector, especially construction, manufacturing, transportation, and some segments of wholesale and retail trade.

The CBTT said that last month, the Keith Rowley administration outlined a six-phase plan for the reopening of the economy and “tentative signs have emerged of a resumption in activity.

“In the second half of 2020, fiscal, structural and monetary policies will need to be closely coordinated and alert to deal with a very dynamic domestic economic environment, complicated by tremendous uncertainties on the global geopolitical and trading fronts.”

Trinidad and Tobago’s Finance Minister, Colm Imbert, will deliver a mid-year review of the economy today. (Photo: Newsday)

The CBTT said that the pace and extent of recovery in 2021 will depend on the still unknown path of the deadly pandemic and the repercussions on global trade, commodity markets and domestic business and employment.

It predicted that the Central Government’s deficit is projected to be higher than initially budgeted for in the financial year 2019/20 resulting in a rise in public sector borrowing, supplemented by drawdowns from the Heritage Stabilisation Fund (HSF).

“The adjustments in the labour market that have already taken place, including layoffs and reductions in working hours, could persist for some time depending on the strength of aggregate demand,” the CBTT said, adding that “headline inflation is likely to remain contained although prices of imported food items could pick up if global supply chains are severely disrupted”.

An aerial view of Port of Spain Trinidad and Tobago. (Photo: london.ac.uk)

The Central Bank said it expects a smaller surplus in the country’s external current account due to relatively subdued energy prices and more sluggish demand for Trinidad and Tobago’s non-energy exports from the Caribbean Community (CARICOM).

Finance Minister Colm Imbert is expected to deliver a mid-year review of the local economy to Parliament today, June 12.