The Mid-Year Review was especially optimistic, though the recovery is very much one-dimensional, says Vangie Bhagoo-Ramrattan, head of First Citizens Research and Analytics – an in-house research team at First Citizens Investment Services Ltd, a subsidiary of First Citizens bank.
"While there are early signals of a turnaround in the energy sector, the rest of the economy remains in the doldrums. Despite the optimism expressed in the Mid-Year budget review, the road to recovery for TT is still precarious and dependent on mostly exogenous (external) factors."
"Since November 2017, there has been consecutive year on year increases in both LNG and Natural Gas production...Natural gas liquids output rose by eight per cent while LNG production increased 2.8 per cent. The energy sector will continue to rely on the buoyancy of the global commodity prices, which largely sets the pace at which large multinational companies deploy capital expenditure. Investment into the TT energy sector is critical to ensure a sustainable reversal of the structural changes witnessed particularly in the crude oil sector."
Bhagoo-Ramrattan said the critical question to be asked is how can the current boost in output be sustained in the medium-to-long term.
She argued that while TT may have exited the recession, several lingering concerns remain. These include the fiscal account, debt and high contingent liabilities, foreign exchange imbalances, the erosion of international reserves and the unsustainable exchange rate regime, which Bhagoo-Ramrattan said "must be addressed to prevent a spiral into a dramatic credit story."