ECONOMY
The twin-island nation of Trinidad and Tobago continues to experience real GDP growth as a result of economic reforms, tight monetary policy, fiscal responsibility, and high oil prices. In 2006 the country experienced a real GDP growth rate of 12.2%. This was expected to level off to 5.5% in 2007. The PNM-led government continues its sound macroeconomic policies. Long-term growth looks promising, as Trinidad and Tobago further develops its oil and gas resources and the industries dependent on natural gas, including petrochemicals, fertilizers, iron/steel and aluminum. Additional growth potential also exists in financial services, telecommunications and transport. Strong growth in Trinidad and Tobago over the past few years has led to trade surpluses, even with high import levels due to industrial expansion and increased consumer demand. The debt service ratio was 2.8% in 2006, up from 1.8% in 2005. In 2006, unemployment fell to 5% down from 6.7% in 2005. In the first quarter of 2007, unemployment was at 6.5%. Headline inflation peaked at 10% (year-on-year) in October 2006, then moderated to 7.9% as of August 2007. Food price inflation slowed to 16.7% (year-on-year) in August 2007, down from 22% in October 2006. After raising its interest rates eight times in 2006, the Central Bank has maintained the rate at 8.0% since September 2006. There are no currency or capital controls and the Central Bank maintains the TT dollar in a lightly managed, stable float against the U.S. dollar. From October 2006 to March 2007, the exchange rate experienced some fluctuation between TT$6.3122 and TT$6.3288 to US $1. The rate as of October 9, 2007, was TT$6.3335 to US$1.
Trinidad and Tobago has made a transition from an oil-based economy to one based
on natural gas. In 2006, natural gas production averaged 4000 million standard
cubic feet per day (mmscf/d), compared with 3200 mmscf/d in 2005. The
petrochemical sector, including plants producing methanol, ammonia, urea, and
natural gas liquids, has continued to grow in line with natural gas production,
which continues to expand and should meet the needs of new industrial plants
coming on stream over the next few years, including iron, aluminum, ethylene and
propylene. In December 2005, the Atlantic LNG fourth production module or
"train" for liquefied natural gas (LNG) began production. Train 4 has increased Atlantic LNG's overall output capacity by almost 50% and is among the largest LNG trains in the world at 5.2 million tons/year of LNG. Trinidad and Tobago is the fifth-largest exporter of LNG in the world and the single largest supplier of LNG to the U.S., supplying two-thirds of all LNG imported into the U.S. As a result of Atlantic LNG Train 4, the energy sector experienced 21.4% growth in 2006 and accounted for nearly 47% of GDP at that year's end.
Growth in the non-energy sector was projected to increase slightly, from 6.6% in 2006 to 6.7% in 2007. The manufacturing sector was estimated to be growing by 8.0% in 2007, down from 9.4% in 2006. The food, beverage and tobacco industry is expected to expand at a rate of 13.4%, up from 8.4% in 2006. This is due to improved performance in meat, poultry, and fish (19%); tobacco (32%); alcoholic beverages (25%); and non-alcoholic beverages (15%). In 2007, slower growth was also expected in other industries, with chemicals and non-metallic minerals expected to slow to 6.4% in 2007 from 12.3% in 2006, and assembly type and related industries slowing to 5.1 % growth in 2007 from 10.1% in 2006. Improved growth was expected from the remaining industries, i.e., wood and related products (4.5%); printing and publishing (7.7%); textile, garments, and footwear (0.6%); and miscellaneous manufacturing (11.9%). Services sector growth was expected to reach 5.2% in 2007, up from 4.3% in 2006, led by construction sector growth resulting from Trinidad and Tobago Government investment in housing and infrastructure and the commencement of new infrastructure projects such as the highway interchange. A marginal increase of 0.3% was projected for the domestic agriculture sector. The government is seeking to diversify the economy to reduce dependence on the energy sector and to achieve self-sustaining growth. The diversification strategy focuses on seven key industries: yachting; fish and fish processing; merchant marine; music and entertainment; film; food and beverage; and printing and packaging. A national research and development fund will be established to stimulate innovation and investment in a new technology park, currently under construction.
Trinidad and Tobago has an open investment climate. Since 1992, almost all investment barriers have been eliminated. The government continues to welcome foreign investors. The government has a double taxation agreement, a bilateral investment treaty and an intellectual property rights agreement with the United States. The stock of U.S. direct investment in Trinidad and Tobago was $3.85 billion as of 2006. Total foreign direct investment inflows over the last five years amounted to approximately US$6 billion. Among recent and ongoing investment projects are several involving U.S. firms: ISG Trinidad started operations in November 2004 in a plant that has the capacity to produce 500,000 metric tons annually of hot briquetted iron. In December 2006 Nucor began producing direct reduced iron for shipment to the U.S. at its plant in Trinidad, which has a production capacity of 2.0 million tons per year. Two aluminum smelter plants are also planned, one of them to be owned by Alcoa. The first major business-class hotel to be opened in several years bears the Marriott Courtyard brand. A Hyatt-managed hotel was scheduled to open in late 2007, part of a multimillion-dollar waterfront development project in Port of Spain.
Trinidad and Tobago's infrastructure is adequate by regional standards. Expansion of the Crown Point airport on Tobago is being planned, which follows opening of the Piarco terminal on Trinidad in 2000. There is an extensive network of paved roads. Traffic is a worsening problem throughout Trinidad, as the road network is not well suited to the rising volume of vehicles and only a rudimentary mass transport system exists as an alternative. Utilities are fairly reliable in cities, but some rural areas suffer from power failures, water shortages in the dry season, and flooding in the rainy season due to inadequate drainage. Infrastructure improvement is one of the government's budget priorities, especially rehabilitating rural roads and bridges, rural electrification, flood control, and improved drainage and sewerage. The government has awarded a contract for the preliminary design of a light rail system which is projected to be completed in five to six years.
Telephone service is modern and fairly reliable, although significantly more costly to consumers than comparable U.S. service, including for wireline, wireless, and broadband services. Change began in the wireless market when the new Telecommunications Authority invited two firms to offer competition to state-owned monopoly incumbent TSTT (co-owned by Cable & Wireless). Two wireless providers, bmobile and Digicel, are already operational, while a third licensee, Laqtel, had not launched service as of October 2007. Two companies, Telestar Cable System Limited and Green Dot Limited, won an October 2007 Telecommunication Authority of Trinidad and Tobago (TATT) auction for radio spectrum to provide public Broadband Wireless Access (BWA) services. Improvements in service and price are likely as competition in the Internet services market increases in coming years.
Economy (2007 est.)
GDP: U.S. $20.9 billion (current prices).
Annual growth rate: 5.5% (2007 est.), 12.2% (2006 preliminary).
Per capita income: U.S. $16,041.
Natural resources: Oil and natural gas, timber, fish.
Petroleum (crude oil, natural gas, petrochemicals): 44.3% of GDP.
Financial services: 13.5% of GDP.
Distribution including restaurants: 14% of GDP.
Manufacturing (food and beverages, assembly, chemicals, printing): 7.2% of GDP (excludes oil refining and petrochemical industries).
Construction and Quarrying: 7.4% of GDP.
Transport/storage/communication: 6.6% of GDP.
Government: 4.6% of GDP.
Education, cultural community services: 2% of GDP.
Electricity and water: 1.3% of GDP.
Agriculture (sugar, poultry, other meat, vegetables, citrus): 0.4% of GDP.
Hotels and guesthouses: 0.2% of GDP.
