T&T Facing a Structural Economic Retreat

• Professor Roger Hosein believes the UNC Government’s first Mid-Year Budget Review is a strategic move to stabilise Trinidad and Tobago’s struggling economy. Finance Minister Davendranath Tancoo’s review, presented on June 18, added $3.14Bn in spending to the original $59.7Bn budget, pushing the fiscal deficit to $9.67Bn.  Hosein describes the review as a necessary fiscal triage, aimed at closing financing gaps, maintaining administrative order, and preserving space for deeper reforms in the full 2026 budget. While it doesn’t introduce broad supply-side reforms, references to export-led growth, FX stabilisation, and tax administration changes suggest that bolder measures may follow.
• However, recent economic reports painted a worsening picture of the economy. Earlier projections, especially the April 2023 edition, anticipated a solid recovery, with real GDP reaching 89.5% in 2025. This expected level of economic activity declined by April 2024, when projections were cut to 85.7% for 2025, signalling weaker-than-expected growth. The April 2025 database worsened the picture further, with the 2025 estimate downgraded again to 84.2 %. The updated figures now show real GDP staying well below 2014 levels through 2027, effectively marking just over a decade of lost growth. These successive revisions reveal that previous fiscal assumptions were based on outdated optimism. The April 2025 WEO reshaped the economic baseline and highlighted deeper structural stagnation than previously acknowledged.”
• The Labour Force Survey for Q4 2024 by the Central Statistical Office (CSO) also showed that the total labour force fell from 602,800 to 595,700, a drop of 7,100 persons. Employment declined from 578,800 to 566,200, reflecting a net job loss of 12,600. Unemployment increased by 5,500, rising from 24,000 to 29,500, which pushed the unemployment rate up from 3.98% to 4.95%.
• On the external front, he noted that net official reserves plunged from US$9.9Bn to US$5.6Bn, while external debt more than doubled from US$2.2Bn to US$5.6Bn. The non-energy fiscal deficit worsened drastically, moving from $12.5Bn to over $26.8Bn. Unfortunately, the food import bill remains high, and tourism arrivals have collapsed from 519,000 to 336,100, indicating lost earnings in the services sector.
• Trinidad and Tobago currently lags regional peers Jamaica and Barbados. “Over the last decade, Jamaica has successfully reduced its public debt, firmly anchored inflation and inflation expectations, and strengthened its external position” (IMF). Jamaica’s real GDP growth improved from 0.9% in FY 2013/2014 to an estimated 2.0% in FY2023/2024. Overall, the IMF’s outlook points to growth settling at its potential rate once the FY2025/26 post Hurricane recovery is complete, with projected growth of 2.1% in 2025.
• Barbados’ real GDP growth is estimated at 4.0% for FY2023/2024, according to the Central Bank of Barbados, up from 0.7% in FY 2013/14. Growth was driven by strong performances in business services, tourism, construction, and retail trade. Additionally, the implementation of the home-grown Barbados Economic Recovery and Transformation (BERT 2022) plan has remained strong and the broad objectives of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements have been achieved. Growth is expected to reach 2.7% in 2025, supported by construction of tourism-related projects and government investment (IMF).

(Sources: Trinidad and Tobago Guardian, IMF and NCBMBTT)