Growth In Trinidad And Tobago To Slow In 2023 As Private Consumption And Exports Moderate

• Fitch Solutions expects real GDP growth in Trinidad and Tobago (T&T) will slow from an estimated 5.6% in 2022 to 2.2% in 2023 due to a moderation in exports and private consumption. 
• Fitch expects private consumption and hydrocarbon exports will provide weaker tailwinds this year, with growth particularly slowing in H223 as the global economy decelerates. Moderating energy prices will also lead to slower hydrocarbon production growth in the quarters ahead, though the sector should remain one of the most important drivers of growth in T&T for 2023.
• Additionally, inflation was extremely elevated in Q422, reaching 8.7% y-o-y in December, and is expected to average 7.9% in 2023, up from 5.8% in 2022, which would continue to affect private consumption. Particularly, higher prices as a result of subsidy removal for fuel and equipment for fishermen, leading to higher fish prices and contributing to overall food prices will weigh on private consumption.
• Notably, government consumption is anticipated to remain modest as the government’s commitment to fiscal consolidation will constrain outlays.
• Overall, Fitch expects government consumption to slow slightly in 2023 compared to 2022, as the government remains committed to fiscal consolidation in the years ahead. Projections are that T&T will run small fiscal deficits in the next few years, as part of a broader effort to reduce its government debt.
• The upside, however, is if elevated inflation leads to public unrest, the government may bring back subsidies, thereby supporting private consumption and growth and boosting growth prospects for the nation.

(Source: Fitch Solutions)