Trinidad and Tobago Energy Sector to Drive Economic Recovery

Trinidad and Tobago's (T%T’s) economy contracted by 0.5% year over year (YoY) in 2025, underpinned by a weak Q4, marking the first full-year economic contraction since 2021. Several key sectors contributed to 2025's weak performance, with notable contractions in domestic trade (-4.0% y-o-y), construction (-3.2%) and public administration (-2.7%).
Despite this weakness, BMI expects the economy to return to growth in the near term, expanding by 0.8% in 2026 and by 2.6% in 2027. This will be driven by a rebound in the energy sector as new gas projects come online. BP's Cypre field, which came online in April 2025 and completed drilling in December, will continue to boost overall production in 2026.
Overall, LNG output has returned to year-over-year growth since December 2025, most recently expanding by 23.3% YoY in April 2026. Shell's Manatee field and BP's Ginger field, expected in 2027, will lift production further. Access to reliable sources for natural gas imports, potentially including the all-important Dragon gas field, would further support a rebound in the energy sector in 2026 and 2027. Favourable energy prices should support inbound investment too, despite external uncertainty.
However, economic conditions in the non-energy sector were softening earlier this year. Trinidad and Tobago's economic activity index shows continued weakness to start 2026, with a pronounced pullback in the non-energy sector (-2.9% YoY) that was larger than the drop in the energy sector (-0.5% YoY). This leading indicator, which tracks quarterly GDP, suggests another contraction to start 2026, a view supported by more granular domestic economic indicators. Credit growth continued to slow in 2026 through April (4.0% YoY, down from 9.1% a year prior) on weak business-sector borrowing, local sales of concrete fell (13.6% YoY) for a fifth consecutive quarter in Q1 2026, and the cashless payments index showed continued weakness to start 2026, slowing to just 3.4% YoY from 8.5% a year prior.
Risks to the near- and medium-term outlooks are tilted slightly to the downside. Global economic uncertainty will likely weigh on inbound investment, alongside business-environment headwinds from stubborn violent crime and ongoing states of emergency. Furthermore, potential delays to energy projects coming online is a downside risk to the 2026 and 2027 forecasts. On the upside, the successful development of the long-awaited Dragon gas project is an upside risk to growth in the near and medium terms, both through increased investment flows and growth in natural-gas-dependent sectors as availability constraints fade.

(Source: BMI)