Central Bank: Global growth slow in 2nd half of 2023

The Central Bank’s Economic Bulletin for January 2024 said global growth slowed in the second half of 2023 as tighter monetary policy restricted domestic demand in several countries.

The bulletin, released on Friday, said local economic activity is expected to improve in 2024, bolstered by continued buoyancy in the non-energy sector, while activity in the energy sector will likely remain subdued.

The bulletin said the energy sector continues to face challenges of constrained gas supplies, coupled with the natural decline in production rates at mature hydrocarbon-producing wells.

The non-energy sector is expected to benefit from the continued strength in business activity alongside robust consumer demand.

Inflation is expected to remain low in 2024, barring fresh external shocks. Weather conditions, possibly higher utility rates and the levy of property taxes could potentially prompt an uptick in domestic inflation.

Central Bank said TT’s gross domestic product (GDP) increased by 1.4 per cent (year-on-year) in the first quarter of 2023, according to data from the Central Statistical Office. It was driven by positive output in the non-energy sector.

It said preliminary indicators suggest domestic economic activity in the non-energy sector remained robust in the second and third quarters of 2023 while energy sector production waned.

It said total exports declined by 45 per cent to US$2,533.7 million in the third quarter of 2023 compared to the previous year.

The unemployment rate fell to 3.2 per cent in the third quarter of 2023, lower than the 5.4 per cent recorded in the same period the year before.

The bulletin said headline inflation decelerated to 0.7 per cent (year-on-year) in December 2023 from 4.7 per cent in July 2023, as price increases for food and non-food items eased.

Food inflation slowed to negative 1.1 per cent in December 2023 from 8.6 per cent in July 2023, while core inflation eased to 1.2 per cent from 3.7 per cent over the same period.

The repo rate remained unchanged at 3.50 per cent during the second half of 2023, in support of the domestic economic recovery.

Gross official reserves amounted to US$6,258 million at the end of 2023.

The government’s fiscal accounts recorded a deficit in the first month of fiscal year 2023/24, underpinned by higher expenditure and lower energy receipts, compared to the previous year.

In December 2023, the gross official reserves totalled US$6.3 billion.

Ample excess liquidity supported robust credit growth of 7.2 per cent during the second half of 2023. Excess liquidity increased to a daily average of $5.5 billion from July to December 2023, compared to $5.1 billion over the same period in 2022.

Externally, global growth slowed in 2023.

Growth is estimated at 3.1 per cent for 2023, down from 3.5 per cent in 2022.

Economic growth in emerging markets and developing economies partially offset weaker growth in advanced economies, with the former expanding by 4.1 per cent in 2023.

Crude oil and natural gas prices declined during the second half of 2023, reflecting softer global demand and concerns about higher interest rates for a prolonged period.

Although gradually easing, inflation rates remained above target in several advanced economies.