Energy sector to lead economy in 2004

The Central Bank of Trinidad and Tobago has predicted a positive outlook for the local economy for 2004, with real Gross Domestic Product (GDP) being expected to grow in the range of 4.5 to 5.5 percent.The bank also projected that this growth will continue to be led by the energy sector with the commissioning of the Atlas methanol plant in the first quarter of 2004 and the N2000 ammonia facility in the last quarter of 2004. Real value added in this sector is expected to grow by 6.1 percent. The underlying rate of inflation is expected to remain relatively low in 2004, although there is a risk that wage agreements concluded in 2003/2004 could exert some upward pressure on domestic prices, the Bank maintained.

In 2003, headline inflation, as measured by the All Items Index of Retail Prices, fell to 2.98 percent in the 12 months to September 2003, compared to 4.5 percent in the 12 months to September 2002. Core inflation, which excludes the movement in food prices, remained below 1.0 percent. The fiscal year 2003/2004 should see Government expenditure growing by 19 percent of $3,066 million to $19,105 million as spending, in particular on education, housing and health is expected to increase. Budgeted revenue is also projected to grow by 10.6 percent to $18,793 million, mainly due to higher oil prices. Consequently, the bank noted, Government will post an overall budget deficit of $312 million, about 0.5 percent of GDP. At the end of the fiscal year 2002/2003, the central government posted a surplus of $958.4 million on its fiscal operations, a complete turnaround from the deficit of $354.3 million recorded at the end of fiscal year 2001/2002. Total revenue amounted to $16,997.7 million, while expenditure was $16,039.3 million.

The expansion of 20.5 percent in revenue was mainly attributed to developments in the energy sector as oil prices averaged US $29.60 per barrel compared with US $24.01 per barrel in fiscal year 2001/2002. Oil revenue in 2003 grew by 82 percent to $6,283.4 million in fiscal year 2002/2003 and its share in total revenue rose from 25 percent to 37 percent. The central government allocated $497.4 million to the Revenue Stabilisation Fund, increasing the accumulated balance to $1,566 million at the end of September, 2003. For this fiscal year. Government plans a significant increase of $696 million or 67 percent in its capital spending programme to $1,727.5 million. The bank went on to predict that TT would post another sizeable current account and overall balance of payments in 2004. This favourable balance of payments, it continued, is based on the expected buoyancy in energy prices.