TT records ten straight years of economic growth

TRINIDAD and Tobago recorded its tenth consecutive year of growth last year with real Gross Domestic Product (GDP) growing by 4.1 percent. However, the unemployment rate remained “sticky” at 10.5 percent. This growth was driven mainly by higher production of crude oil and LNG as well as refinery throughput. The energy sector grew by 11.4 percent while real output in the non-energy sector grew at a slower rate of 1.8 percent last year. In the non-oil sector, the strongest growth performance was recorded in the areas of distribution (5.9 percent), transport storage and communication (6.9 percent) and construction (4.8 percent).

The figures are contained in the Monetary Policy Report for March 2004 which was released yesterday by the Central Bank. The report also points to a relatively modest growth of 2.0 percent in the manufacturing sector while real output in agriculture contracted by 15 percent because of unusually low sugar and citrus production. In terms of unemployment, the report said after falling from 13.0 percent in 2002, the rate continued to remain “sticky” at just about 10.5 percent at the end of September 2003.

In terms of foreign exchange and balance of payments, the report said there was an overall balance of payments surplus of US$334 million (3.1 percent of GDP) last year compared with US$49 million (0.5 percent of GDP) in 2002. It said the foreign exchange market continued to experience intermittent periods of tightness throughout last year, sales of foreign exchange to the public being expanded by 13 percent to US$2,625 million, while purchases rose by just 3.3 percent to US$2,070 million, resulting in a gap of US$555 million by the end of last year.

Against a background of strong accumulation in official reserves, the Central Bank sold net US$505 million in foreign exchange to the banking system in 2003. The country’s foreign reserves position remained quite strong with gross official reserves amounting to US$2,242 million, (representing 6.3 months of imports of prospective goods and non-factor services) an increase of US$334 million from the end of 2002.

For the first four months of this year, the report said the central Government recorded an overall surplus of TT$740 million in its fiscal operations compared with a budgeted overall deficit of TT$558 million. Government revenue amounted to TT$6,085 million, 11 percent higher than expected while expenditure amounted to TT$5,345 million, 12 percent less than budgeted. The report in terms of local prospects for this year, anticipated a continued build-up in liquidity in the banking system while exports of the manufacturing sector should be bolstered by the expected pick-up in regional demand.

Governor of the Central Bank Ewart Williams said at yesterday’s launch of the report at Level 16, Central Bank, Port-of-Spain, that the low interest rate environment last year had several effects. He said there were signs toward the end of the year that private sector credit expansion was beginning to pick up and some savers shifted to higher risk assets, such as equities, mutual funds and real estate. He said that explained the buoyancy in the stock market, the sharp increase in mutual fund sales and the reported rapid rise in real estate values.