He said, “Most analysts expect oil prices to remain low for a long time for several reasons: on the supply side, the advent and relative resilience of shale oil production and increased oil production by OPEC members play an important role. As regards demand, lower GDP (Gross Domestic Product) growth in emerging markets has tended to reduce oil demand growth, especially in light of the secular increase in global oil efficiency.” Hilaire made the comments in a speech “Aspects of Trinidad and Tobago’s Global Economic interactions,” delivered at the Central Bank as he launched the bank’s Monetary Policy Report for November 11, 2016. Among other things the bank said that falling energy exports had led to a decline in the country’s external position by mid-2016; the bank maintaned the Repo Rate at 4.75 percent in the first three quarters of 2016 because of domestic weaknesses; after rising in May and June, liquidity levels were more tightly managed in subsequent months and the bank has continued to manage liquidity flexibility to meet market conditions.
He said private sector borrowing slowed by the third quarter of 2016 with business lending declining sharply.
Observing that the TT dollar had depreciated over the first ten months of the year, the Central Bank said it continued to support the foreign exchange market. He added that, “Natural gas price declines also appear to be long lived in light of the North American shale gas boom, recent discoveries of vast gas fields in developing countries and the resumption of nuclear-powered electricity generation in Japan.
If this assessment holds true, a permanent shift in energy prices would require not only short term stabilisation efforts to deal with initial balance of payments and fiscal difficulties, but a more fundamental re-engineering of the Trinidad and Tobago economy to deal with lower energy export and fiscal earnings. He said the country was dependent on oil prices and that around 2008 oil prices were around U.S $100 a barrel but in 2015 were in the late 40’s, which was worsened by declines in energy production. According to Hilaire, while some other countries had to scramble immediately to make adjustments, this country had some space because Trinidad and Tobago had some significant buffers in the form of fiscal space because of previous years of surpluses. He said that Trinidad and Tobago is a member of the Group of 24 at the World Bank and the International Monetary Fund (IMF).
He said the Group of 24 is a very influential body which represents the positions of its members at the World Bank and the IMF on monetary, financial and developmental issues. Hilaire said Trinidad and Tobago was one of founding members of the group; it was the smallest country in the group, the only Caribbean country and just one of a few Latin American countries to have been granted membership. He added that there was ongoing debate about increasing the size of the group to accommodate more developing countries because a lot of them wanted to ensure that their views are heard.
He said citizens of this country have to realise that although Trinidad and Tobago is small it has a lot of weight in international affairs and it has a Gross Domestic Product that is high.