Central bank paints gloomy picture of Trinidad and Tobago's economy

Central bank paints gloomy picture of Trinidad and Tobago's economy

Friday, September 18, 2020

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PORT OF SPAIN, Trinidad (CMC) — The Central Bank of Trinidad and Tobago (CBTT) says the coronavirus (COVID-19) has affected all aspects of the local economy this year, as it warned that the world economic performance will be severely impacted by the emergence of the virus.

In its July Economic Bulletin released here earlier this week, the CBTT noted that the International Monetary Fund (IMF) in its June 2020 World Economic Outlook (WEO) Update is anticipating global growth to contract by 4.9 per cent in 2020.

Finance Minister Colm Imbert is due to deliver the 2020-21 national budget on October 5.

The CBTT said that in the Trinidad and Tobago situation, the energy sector is expected to slow as global economic activity and international travel has been curtailed, resulting in significant contractions in demand for many energy products.

The non-energy sector will also continue to be impacted in a climate of uncertainty as to the course of the disease and the implementation of needed measures. Moreover, global supply disruptions will have knock-on effects on domestic manufacturing, and wholesale and retail trade. Inflation is expected to stay subdued the central bank noted.

It said that working conditions, including shift lengths and timing, rostering and 'work-from-home' arrangements, have already adapted to the changed circumstances in recent months and will continue to evolve.

“The room for additional fiscal accommodation will be fairly narrow in the current circumstances, while the prevailing high excess liquidity will influence the timing of fresh monetary policy actions”.

But the CBTT has noted that overall, the impact of the pandemic has heightened, indicating the imperativefor coordinated fiscal, monetary and structural policies for assuring macroeconomic stability.

In its analysis, the CBTT noted that on the domestic front, activity in the energy sector declined in the second quarter of 2020.

It said broad contractions were observed in this sector, including natural gas, crude oil, liquefied natural gas while methanol output improved.

Outside of energy, indicators monitored by the central bank suggest that activity across the non-energy sectors was uneven and somewhat lethargic in the first quarter of 2020.

It said the financial and insurance, and real estate sectors remained resilient and activity in the electricity and water, excluding gas, and manufacturing excluding refining and petrochemicals) sectors increased.

At the same time the wholesale and retail trade, excluding energy, construction and transportation and storage sectors posted declines.

“As in the rest of the world, the global pandemic has had a dampening effect on output that is likely to persist into the final quarter of 2020.COVID-19 has also impacted Trinidad and Tobago's labour market, either directly or via the mitigationmeasures employed to restrict the virus.

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