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Trinidad and Tobago: CBTT says economy expected to improve

Jun 19, 2023

In its latest Monetary Policy Report, the Central Bank said yesterday domestic economic activity is expected to improve and be fairly broad-based.

It noted that several new projects should help the energy sector, while an uptick in business and consumer demand bodes well for non-energy activity and could offer more job opportunities.

"The strengthening of the domestic recovery will take place alongside a much more competitive global environment that requires all economies and businesses to significantly improve their efficiency," the Central Bank outlined, in the May Monetary Policy Report.

Additionally, it noted that macroeconomic policy coordination in Trinidad and Tobago–on the fiscal, monetary and structural fronts–will remain essential in providing a stable supportive setting.

The Central Bank also noted that domestic price pressures as measured by the Central Statistical Office’s (CSO) Retail Price Index (RPI) eased in early 2023 after increasing in the second half of 2022.

After peaking in December 2022 (8.7 per cent), headline inflation trended downward reaching 6 per cent in April 2023.

"The deceleration in headline inflation came from slower price increases in food and core inflation," the bank noted.

It added that food inflation, the most volatile component of headline inflation, decelerated to 11.2 per cent in April 2023 after reaching a high of 17.3 per cent in December 2022 and January 2023.

Core inflation, the report cited, slid from 6.7 per cent in December 2022 to 4.8 per cent in April 2023.

Expanding on the issue of inflation, the Central Bank said: "Domestic price pressures are anticipated to continue to ease in the short-run.

"Core inflation, nonetheless, may be affected by the path of wage settlements, a gradual recovery of consumer demand, and possible implementation of higher utility rates. "Food inflation is expected to be tempered by the slowdown in international food costs but adverse weather could lead to periodic spikes in domestic agricultural produce prices."

Export earnings contracted over the final quarter of 2022, driven by lower energy exports.

The report said export earnings fell by 6.5 per cent (year-on-year) to US$3,439.5 million over the fourth quarter of 2022 due to a reduction in energy exports underpinned by lower energy export volumes.

More specifically, energy exports declined by 5.3 per cent (yearon-year) to US$2,966.4 million during the three months to December 2022.

The report added that total imports grew by 1.2 per cent (yearon-year) to US$1,725.1 million over the final quarter of 2022 driven primarily by increased capital imports.

The Central Bank further noted that consumer loans climbed, spurred in the main by the pick-up in local activity.

In the 12 months to March 2023, consumer credit grew by 6.2 per cent, higher than the 4.2 per cent expansion observed in September 2022, the report added.
 

Article Published June 17, 2023 on guardian.co.tt