PORT – OF – SPAIN, Trinidad – Following four years of turbulence triggered by a devastating pandemic, deepening geo-economic fragmentation, surging inflation, and widespread monetary policy tightening, the global economy in 2024 seems to be trending toward a ‘soft landing’. According to the International Monetary Fund’s (IMF) latest projections, growth for 2024 will hold steady around 3.2 percent owing to markets rebounding as central banks exit constrained monetary policy; easing financial conditions; equity valuations rising; capital flows to most emerging market economies (excluding China) being buoyant, and some low-income countries and frontier economies regaining market access.
With economic buoyancy expected to continue in 2024, growth in Advanced Economies is forecasted to be muted at 1.7 percent in 2024, the same growth rate estimated for 2023. Returning to pre-pandemic levels, this level of growth is expected to be sustained mainly by growth in the United States (US) coupled with stronger consumption due to rising real wages and higher investment from easing financial conditions in the Euro Area.
In the Latin America and the Caribbean region, economic growth is projectedtodecreaseto 1.9 percentin 2024 froman estimated 2.3 percent in 2023 driven by weakening global economic activity, elevated debt levels and erratic weather occurrences. A subdued external environment together with rising protectionism and policy uncertainty is expected to contribute to decelerating growth in Emerging and Developing Asia from an estimated 5.7 percent in 2023 to 5.4 percent in 2024.
Trinidad and Tobago is forecasted to register real Gross Domestic product (GDP) growth of 1.9 percent in 2024, following moderate growth of 1.3 percent in 2023, according to the ministry of finance’s estimates. While the estimated growth in 2023 is indicative of the economy’s resilience, coupled with the combined efforts of the public and private sectors toward diversification, it is expected that this trajectory is maintained in 2024. As such, Non-Energy Sector growth of 2.5 percent, along with an increase in Taxes Less Subsidies, is expected to outweigh the 5.6 percent decrease in the Energy Sector during calendar year 2024.
The ministry of finance estimates nominal GDP to fall to $184,770.1 million in 2023. The lower-than-initially estimated 2023 Nominal GDP was due to subdued energy prices coupled with a lower inflation rate. In particular, the European Brent spot price for crude oil averaged US$82.47 per barrel in 2023, an 18.2 percent contraction from the US$100.78 per barrel one year earlier. The Henry Hub spot price for natural gas declined more sharply, by 60.5 percent, to US$2.54 per million British thermal units (MMBtu) from US$6.42 per MMBtu in 2022.
However, given the slightly higher crude oil prices during the January to August 2023 period, where the European Brent spot price for crude oil rose by 3.7 percent to US$83.56 compared to US$80.59 in the similar period of 2023, the ministry now anticipates nominal GDP to expand to $186,269.4 million in calendar 2024. In fiscal year terms, nominal GDP is expected to be around $185,894.6 million, marginally lower than the fiscal year estimate for 2023 of $189,323.8 million.
Following a historic high in world inflation in 2022 and as headline inflation approached its pre-pandemic level in most economies for the first time in late 2023, global inflation is forecasted to decline steadily. In Trinidad and Tobago, year-on-year Headline inflation, remained stable and below one percent during the first eight months of 2024, recording its lowest rate of 0.3 percent in both January and July 2024, following which there was a slight increase to 0.4 percent in August 2024. This reflected the movement in pricing pressures within both the food and core components of the All Items Consumer Price Index (CPI) during January to August 2024.
During the three-month period from January to March 2024, there was a marked improvement of 123.1 percent in the productivity of all workers in all industries when compared to the 26.9 percent expansion recorded in the same period in 2023. The productivity gain between January and March 2024 was attributed to improvements in the Assembly Type & Related Products; Food Processing; Drink & Tobacco; Petrochemicals; and Natural Gas Refining industries.
Mid-year estimates of population for Trinidad and Tobago for 2024 indicate a 0.1 percentrise to 1,368,333 persons from 1,367,510 persons in 2023. Supporting this marginal increase is a positive net migration rate as both the provisional death rate and birth rate are projected to continue their downward trajectory, from 10.2 deaths per 1,000 persons in 2023 to 10.1 deaths per 1,000 persons in 2024, and from 9.6 births per 1,000 persons in 2023 to 8.8 births per 1,000 persons in 2024.
In the first quarter of 2024, the unemployment rate in Trinidad and Tobago increased to 5.4 percent, compared to 4.1 percent in the fourth quarter of 2023, and 4.9 percent in the first quarter of 2023. The size of the labour force fell by 10,100 persons during the first three months of calendar 2024, as a result of a marginal contraction of the labour force participation rate to 54.7 percent from 55.5 percent in the fourth quarter of 2023.
Premised on a budgeted oil price of US$85.00 per barrel and natural gas price of US$5.00 per MMBtu at the beginning of fiscal 2024, total revenue and grants was estimated at $54,012.3 million. With total expenditure for fiscal 2024 estimated at $59,209.1 million, the budgeted overall deficit for central government operations for fiscal 2024 was $5,196.8 million.
As global oil and gas prices fluctuated during the first half of fiscal year 2024, there was a downward adjustment to revenue by 5.6 percent, based a projected oil price of US$80.25 per barrel and natural gas priceof US$3.87 per MMBtu. As a result, the mid-year budget review estimated total revenue and grants of $51,000.0 million. Additionally, total expenditure increased to $60,592.1 million, thereby causing central government operations to register an expected overall deficit of $9,592.1 million for fiscal 2024.
However, the latest revised estimates of revenue and expenditure, subsequent to the mid-year review, now estimates total revenue and grants at $50,363.6 million and total expenditure at $57,505.7 million. This 5.1 percent reduction total expenditure is expected to result in central government operations realizing an overall deficit of $7,142.1 million and a current account deficit of $5,564.1 million for fiscal 2024.
Comprising adjusted general government debt of $140,582.9 million and borrowings for Open Market Operations (OMOs) of $2,730.0 million, total general government debt is estimated at $143,312.9 million in fiscal 2024, moving from $141,550.3 million in fiscal 2023. This represents an increase of $1,762.6 million reflecting the net effect of principal repayments, disbursements and issuances of new financings.
Adjusted general government debt, by the end of fiscal 2024, is estimated to increase by 3.0 percent to $140,582.9 million, compared to $136,540.3 million at the end of fiscal 2023. This number comprises central government domestic debt of $73,995.3 million, central government external debt of $36,737.7 million and non-self serviced government guaranteed debt of $29,849.9 million. Adjusted general government debt, as a percentage of GDP, is estimated to increase by 3.5 percent to 75.6 percent by September 30, 2024 from 72.1 percent as at September 30, 2023.
Central Government Domestic Debt is projected to increase by 4.9 percent to $73,995.3 million in fiscal 2024 from $70,540.9 million in fiscal 2023. Accounting for 52.7 percent of adjusted general government debt, central government domestic debt is estimated to be 39.8 percent of GDP in fiscal 2024.
Projected to increase by 6.3 percent to $36,737.7 million in fiscal 2024 from $34,568.3 million in fiscal 2023, central government external debt accounts for 26.1 percent of adjusted general government debt and 19.8 percent of GDP.
Total Central Government Debt Service is expected to decrease by 17.4 percent to $12,948.6 million at the end of fiscal 2024 from $15,676.6 million at the end of fiscal 2023. With total central government debt service comprising of $7,848.3 million in principal repayments and $5,100.3 million in interest payments, this decline in debt service was mainly attributed to a reduction in bullet principal repayments in fiscal 2024 as compared to fiscal 2023.
During the period October 2023 to June 2024, the rest of the non-financial public sector recorded an operating surplus of $246.0 million, a significant improvement from the $853.3 million deficit recorded for the preceding fiscal period. This turnaround was driven by a sizeable operating surplus of $1,951.8 million by state enterprises, which outweighed the $1,705.8 million operating deficit recorded by public utilities during the fiscal 2024 review period.
Over the nine-month period, current transfers from central government to the sector totaled $2,661.6 million, a 21.4 percent reduction from the $3,386.3 million transferred in the corresponding fiscal 2023 period. These transfers were utilized for interest payments on loans, deficit/operational financing and subsidy payments for the sale of petrol and operations of the inter-island ferries and Water Taxi.
Capital Revenue and Grants also decreased by 10.5 percent to $487.1 million in fiscal 2024 when compared to the $544.2 million recorded over the previous reporting period. However, Capital Transfers from Central Government expanded by 5.9 percent to $3,268.3 million and were primarily utilized for principal repayments of loans and for financing of infrastructural projects. Capital Expenditure increased to $3,248.6 million compared to the $3,134.1 million expended over the same period one year earlier.
Consequently, the overall balance of the rest of the non-financial public sector improved considerably from a deficit of $828.3 million to a surplus of $1,880.6 million over the October 2023 to June 2024 period. This was on account of the reversal in the overall cash balance of state enterprises from a deficit of $1,458.3 million as at June 2023 to a surplus of $962.9 million.
In September 2024, Standard & Poor’s (S&P) Global Ratings reaffirmed Trinidad and Tobago’s ratings of ‘BBB-/A-3’, as well as reaffirmed its transfer and convertibility assessment of ‘BBB’ while maintaining Trinidad and Tobago’s outlook at stable. Meanwhile, Moody’s Investors Service (Moody’s) reaffirmed Trinidad and Tobago’s ratings at Ba2 and the outlook was changed to stable from positive. CariCRIS has not yet issued its 2024 rating for Trinidad and Tobago; therefore, the 2023 rating of CariAA (Foreign and Local Currency Ratings) assigned to the Government of Trinidad and Tobago (GoRTT) on its regional rating scale and stable outlook for the sovereign holds.
Sales of foreign exchange to the public by authorized dealers, over the period October 2023 to August 2024, totalled US$5,355.5 million; in comparison to the corresponding period one year prior, this was 9.6 percent lower than the recorded sales of US$5,923.3 million. Simultaneously, purchases of foreignexchange from the public (except the Central Bank) by authorized dealers totalled US$4,169.6 million; this represents an 8.3 percent decrease from the US$4,546.5 million purchased during the same period in 2022/2023. The Central Bank intervened by selling 4.0 percent more than the US$1,158.1 million sold to authorized dealers over the first eleven months of fiscal 2023, totalling US$1,204.4 million in the same period of fiscal 2024.
In addition, under the special foreign exchange windows for public sector agencies and other specific entities, a further US$ 310.0 million was allocated to EXIMBANKUSDForex Facility; US$350.0 million to the USD Forex Facility to EXIMBANK for COVID-19 Pandemic-Related Necessities; and US$458.1 million under USD Forex Facility for Direct Payments to Public Sector Organizations, over the period October 2023 to September 24, 2024.
There was a marginal depreciation of the weighted average TT/US dollar selling rate from US$1 = TT$6.7790 in October 2023 to US$1 = TT$6.7817 in August 2024. Similarly, the TT dollar devalued against the UK pound sterling (by 6.6 percent), the Euro (by 5.2 percent), and the Canadian dollar (by 1.2 percent) over the eleven-month period ending August 2024.
Over the period October 2023 to June 2024, monetary aggregates expanded moderately with the acceleration in the year-on-year growth rate of Broad Money (M2) from 2.6 percent to 2.7 percent, as there were improvements in time and savings deposits of 23.8 percent and 2.9 percent, respectively. There was, however, a deceleration in Narrow Money (M1-A) from a 0.2 percent increase to a 1.3 percent decline over the same period as a 1.8 percent reduction in demand deposits outweighed a 1.4 percent increase in currency in active circulation over the nine-month period.
Over the period October 2023 to June 2024, private sector credit growth remained robust. This 6.6 percent growth in this area was largely driven by an expansion in consumer lending by commercial banks which surpassed business and real estate mortgage lending over the review period. On the other hand, non-bank financial institution lending decelerated considerably due to a slowdown in non-bank lending to consumers, which surpassed the deceleration in contractions in real estate mortgage lending and the acceleration in business lending.
Over the period October 2023 to August 2024, Trinidad and Tobago’s stock market performance deteriorated as evidenced by a 12.3 percent fall in the Composite Price Index (CPI) to 1,060.6 from 1,209.6. This market decline was on account of decreases of 13.9 percent and 6.2 percent in the All Trinidad and Tobago Index (ATI) andtheCrossListedIndex(CLI), respectively. Despite continued credit growth and positive trends in the non-energy sector, investor confidence as it relates to potential domestic equity earnings remained subdued, possibly owing to contractions in the domestic energy sector and a moderate level of economic uncertainty.
Provisional data suggests increased activity in the primary debt market for the first eleven months of fiscal 2024, with the issuance of 15 private placements valued at $10,178.1 million comparable to eleven placements valued at $10,846.0 million over the same period one year prior. Included in the 11 private placements issued by the Central Government was the successfully issuance of US$750.0 million on the international bond market.
For the eleven-month period ending August 2024, trading volumes on the secondary government bond market remained robust, albeit at lower values with 438 trades being recorded at a face value of $62.4 million, primarily dominated by the government 2037 series II bond.
Over the first six months of fiscal 2024, there continued to be expansions in the mutual funds industry. Growing by 1.8 percent to $52,780.0 million compared to a 1.6 percent increase over the corresponding period one year earlier, aggregate funds under management improved performance was largely driven by modest gains in Money Market funds of 3.0 percent and in fixed income funds of 1.4 percent. Marginal improvements of 0.9 percent and 0.3 percent were also recorded in Equity funds and ‘Other Funds’, respectively.
During the first three months of calendar 2024, Trinidad and Tobago’s balance of payments recorded a deficit of US$736.1 million, widening from the US$47.8 million deficit reported in the corresponding period in calendar 2023. As energy export earnings fell while imports increased, the net goods trading position deteriorated, resulting in a smaller Current Account surplus. Compounding this was a lower net outflow on the financial account mainly reflective of movements in portfolio and other investment.
Gross official reserves amounted to US$5,537.5 million, equivalent to 7.8 months of import cover, as at August 31, 2024; a US$720.4 million reduction from the level recorded at the end of calendar 2023.
The Heritage and Stabilisation Fund (HSF), as of September 26, 2024, was estimated to have a Net Asset Value (NAV) of US$6,095.8 million in contrast to the NAV of US$5,390.2 million recorded as at September 30, 2023. This represents a gain of US$705.6 million despite there being three withdrawals totalling US$369.95 million from the HSF during fiscal 2024, which were in accordance with Section 15 of the HSF Act (2007) with respect to fiscal year 2023. There were no contributions to the HSF in fiscal 2024.
