Central Bank: Trinidad and Tobago did better than other economies in 2022

THE Central Bank suggested TT's economy had outshone most of the world last year with a healthy non-energy sector and now seemed set to have a great year ahead based on an ongoing surge in natural gas production, according to the Economic Bulletin for January 2023 issued on Monday.

A table in the report (Summary of economic indicators) said in fiscal 2022 the TT economy had grown by about 4.1 per cent, far ahead of the world (3.4 per cent), advanced economies (2.7 per cent) and emerging and developing markets (3.9 per cent.)

This was reflected in a synopsis titled Overview and Outlook.

"Domestically, economic activity improved in the second quarter of 2022, reflecting a resurgence in non-energy sector performance."

It said Central Statistical Office (CSO) data indicated TT's real GDP grew by 6.6 per cent (year-on-year) in the second quarter of 2022.

"Growth in the non-energy sector was strong at 10.5 per cent, while the energy sector declined by 2.5 per cent."

This came against a backdrop of the Russia/Ukraine war plus fallout from the covid19 pandemic both pushing up global food and energy prices as reflected in global rates of inflation not seen for decades, which many central banks curbed by raising interest rates which dampened business activity and consumer spending.

Despite that, global energy commodity prices remained elevated from July-December 2022, although easing in recent months.

Domestically, the report said TT faced accelerated inflation in 2022, driven by external and local supply-side factors.

"The surge in international food commodity prices, supply disruptions and adverse local weather conditions helped to push headline inflation to 8.0 per cent (year-on-year) in November 2022 – the highest rate since late 2014 – compared to 4.9 per cent in June."

This rise in headline inflation included a 13.8 per cent surge in food inflation plus a 6.6 per cent jump in core inflation.

Unemployment stood at 5.4 per cent by the third quarter of 2023. Official reserves stood at a healthy $6.8 billion, worth 8.6 months of import cover.

Comparing the first quarters of fiscal 2021 and 2022, it said the Ministry of Finance recorded a $2 billion surplus in October-December 2022, compared to a $653.9 million surplus in 2021. "Energy revenue doubled, outstripping the fall in non-energy revenue and the increase in expenditure between these two quarters."

The general government debt fell by about $1 billion, from $129.7 billion in September 2022 to $128.8 billion in December 2022.

In the non-energy sector, the report said, "Even as economic activity picked up and credit growth expanded, liquidity remained ample.

"Private sector credit growth expanded in the second half of 2022, driven by robust corporate lending and a rebound in consumer loans."

In its outlook, the report said the IMF's 2023 forecast was for 2.9 per cent global economic growth, some 0.2 per cent better than forecast last October, driven by growth in China upon lifting its covid19 restrictions plus decent performances in the United States and the Euro area.

The report said the TT economy was expected to be bolstered by the energy sector in 2023.

"Natural gas supplies will be boosted by key upstream energy sector projects such as Shell TT’s Colibri, DeNovo’s Zandolie and bpTT’s Cassia Compression.

"Over the short term, energy prices are anticipated to remain elevated but may experience some softening."

Likewise the report was optimistic about TT's non-energy sector, due to increased business activity and consumer demand.

"The pace of this recovery will depend in large measure on the extent of business confidence, and relatedly on how much progress is made in improving the ease of doing business in TT.

"Barring a major resurgence in the covid19 pandemic, the restart of national festivals and ancillary activities, such as the return of cruise ships, are anticipated to be components of a more durable and broad based recovery."

The reported said a "strong growth in natural gas production" – at 20 per cent – had boosted LNG production by 64 per cent while outweighing a 4.3 per cent drop in crude oil volumes, (seemingly year on year.) Gas production rose from 2,378 million cubic feet per day (mmcf/d) to 2,854 mmcf/d, while crude oil volumes fell from 60,500 barrels per day to 57,900 bpd, between the third quarters of 2021 to 2022.

For petrochemicals, the report said a 9.2 per cent drop in ammonia production outweighed a 1.2 per cent rise in ammonia output.

Momentum in the non-energy sector likely slowed in the third quarter of 2022, especially in wholesale, retail and manufacturing, although transport and storage improved. The report noted much spare capacity in industry, with a 60 per cent capacity utilisation in the sector.