Trinidad and Tobago: Growth Outlook for 2025 Remains Subdued

  • After a relatively strong 2024 and a contraction in Q1 2025, BMI expects that Trinidad and Tobago will see modest growth for the remainder of 2025 and 2026.
  • T&T’s economic growth, measured by YoY real GDP growth, was above-trend at 2.5% in 2024, but contracted in Q1 2025 by 2.1%. This was T&T’s worst quarterly figure since Q1 2021 and was driven by contractions from the energy (-4.8%) and non-energy (-1.0%) sectors. The decline occurred amid a weak external demand environment, ongoing trade uncertainty, a softening labour market, and depressed energy prices.
  • Domestic trade and repairs, the largest industry in Trinidad and Tobago’s quarterly GDP tables, contracted by 6.5%, with mining, transportation and storage, and utilities also contracting. However, some industries grew, including manufacturing and construction, though at a slower rate than in the previous quarter.
  • Notwithstanding the Q1 slump, BMI expects modest growth for the remainder of 2025 and 2026. T&T’s energy-dependent economy is expected to grow by a modest 1.3% in 2025 and 2.7% in 2026, driven by increases in hydrocarbon production.
  • BMI’s Oil and Gas team forecasts a 2.0% increase in gas output in 2025, a 12.0% increase in 2026, and a 4.2% increase in 2027. This view is underpinned by new gas fields coming online over these periods. Following a disappointing Q1, T&T’s LNG production saw strong growth in Q2 (27.8%) and in the first two months of Q3 (30.3%), with year-to-date output up 15.1%.
  • Additionally, increased tourist arrivals in Q2 (16.8%), growth in cashless payments, and an increase in the volume of point-of-sale purchases (7.7%) suggest stabilising domestic demand. Inflation is also expected to remain low over the near and medium terms, supporting household consumption.
  • However, declines in local cement sales and commercial vehicle sales in Q2 suggest sluggish business investment activity. Import data also points to ongoing investment weakness, with notable contractions in imports of capital goods in Q1 (-32.9%) and Q2 (-4.0%).
  • Notwithstanding the moderate outlook, policy headwinds to growth will persist. In the near term, the Central Bank of Trinidad and Tobago (CBTT) is unlikely to ease monetary policy to stimulate domestic growth. Instead, BMI expects that over the medium-term, the CBTT will raise its policy rate to counter capital outflows and stabilise the domestic foreign-exchange market, a headwind to growth in an already sluggish economy. Moreover, there is little scope for a growth-focused fiscal stance, with the forthcoming 2026 budget - expected in early October- unlikely to deliver meaningful stimulus given ongoing fiscal constraints.

(Source: BMI)