Trinidad and Tobago: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Trinidad and Tobago is heavily dependent on the production of energy and was badly affected by the drop of hydrocarbon prices in recent years: the country went through four years of recession. With the economy already suffering, the country was was deeply impacted by the COVID-19 crisis. According to updated IMF forecasts, GDP growth fell by an estimated -1% in 2021. However, growth should pick up to 5.4% in 2022 and 2.1% in 2023. The country will have to put in place a big effort to diversify its economy, as existing sites saw their production level decline, while the unfavourable situation in Venezuela is impacting the refining industry. Household consumption is expected to contribute positively to growth, also thank to a rise in the minimum wage.

The IMF calculated 2021 gross debt at 70.4%, with 72.5% and 74.6% forecasted for 2022 and 2023, respectively. It is mainly denominated in TTD and around four-fifths of it are held domestically. The public balance is historically negative, although it has been reducing in recent years. Estimated at -7% in 2021, it is expected to decrease to -6% in 2022 amid an increase in the minimum wage and extensive subsidies to households and local health authorities. Inflation stood at 1% in 2021, and should decrease to 0% in 2022 before increasing to 1.4% in 2023, according to the latest World Economic Outlook of the IMF. The twin island state of Trinidad and Tobago is a small but high-income country with one of the highest per capita incomes in Latin America and the Caribbean. Trinidad and Tobago has a sophisticated economy for a country of its size, embracing mineral extraction, agriculture, industry, tourism and services, but it is underpinned by a single commodity: oil. Petroleum and petrochemical industries account for about 35% of GDP while ores and mineral account for over 80% of exports. The country has also become a major financial centre in the Caribbean. Diversifying the economy remains the main challenge the country will have to face in the next years. A host of other factors, including low labour productivity, inefficient government bureaucracy and corruption have hampered economic development. In 2021, the government continued implementing a series of fiscal measures to mitigate the impact of COVID-19, which included VAT and income tax refunds to individuals and SMEs, liquidity support to individuals and small businesses via credit union loans at reduced interest rates and long repayment periods, grants to hoteliers to upgrade of their facilities; food, rental and income support for low-income vulnerable groups, import duty and VAT waivers on imports of certain medical and emergency supplies, and additional funding for the Ministry of Health to deal with COVID-19. Additionally, the Central Bank reduced the policy rate by 150 bps to 3.5%, and the reserve requirement on commercial bank deposits by 300 bps to 14%. Overall, although the pandemic has significantly impacted the Trinidadian economy, the country has begun to recover.

According to the last available data, the IMF estimated the country's unemployment rate around 2.8% in 2020, and it is expected to remain stable in the next two years, despite the negative economic impact of the COVID-19 pandemic. However, the informal sector is still developed. Social issues include an ageing population, low labour participation rate, insufficient job creation, low labour productivity, difficulties to open a business and unmanaged migration, as well as poverty (20% of the population is living below the poverty line), inequality and one of the highest crime rates in the world.

Monetary Indicators	2016	2017	2018	2019	2020
Trinidad and Tobago Dollar (TTD) - Average Annual Exchange Rate For 1 GHS	1.67	1.56	1.48	1.31	1.21

Source: World Bank - Latest available data.

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Latest Update: February 2023