12:15 PM Port of Spain, Trinidad – Trinidad economy contracted in the first quarter by 1.2% and the government deficit doubled in the first eight months of current fiscal year ending in May. Inflation remained elevated despite four rate increases in a row.
Trinidad economy may well be in recession according to the latest data available from the Central Bank of Trinidad.
Economic Bulletin from the central bank showed that the economy contracted in the first quarter, unemployment rose, inflation remained elevated and the government deficit doubled.
The bleak report only offers data on the economy till the end of first quarter and since then the price of crude oil has fallen and the business confidence has weakened more.
Economy contracted by 1.2% in the first quarter of 2015 from a year ago quarter and declined by 1.4% from the previous quarter.
The non-energy sector expanded by 0.2% but the energy sector contracted by 3.3% largely on the decline in production and weakening crude oil prices in global markets
The economy is likely to have contracted in the second and the current quarter because of the continued fall in oil prices and further natural gas production decline. In addition, agriculture sector is declining and manufacturing sector is struggling with foreign exchange shortage.
The preliminary data on jobs, business confidence and ongoing weakness oil prices suggest that the economic contraction in the June and the current quarter may have even accelerated.
Unemployment rate at the end of first quarter increased to 3.7% from the 3.3% at the end of December 2014 and from 3.1% in the quarter a year ago.
Also, government deficit in the fiscal year in eight months to May increased to TT$2.3 billion from TT$1.03 billion in the same period a year ago.
Total government revenues declined 1.7% to TT$34.1 billion, largely because of the decline in crude oil and natural gas prices.
The revenues decline would have been larger without the one-time receipt of TT24.5 billion from the sale of CLICO Treasury Bills.
Central government spending increased 1.6% mainly on the account of higher spending in capital programs.
Net public sector debt outstanding debt increased to 39.9% of GDP at the end of March 2015.
Foreign currency reserves declined to US$10.6 billion at the end of June 2015 from US$11.3 billion at the end of 2014 or fell from 12.7 months of imports to 12.2 months.
Central Bank has been aggressive in raising interest rates and fighting inflationary forces and the bank has lifted rates four times so far in 2015.
Rates were increased by 25 basis points in January, March, May and July and repo rates were lifted to 4.25% by July from 3.25% at the end of 2014.
Energy sector, the main driver of the domestic economy continued to deliver weak performance in the first quarter.
Oil production increased 4.4% after the field operated by British Petroleum restarted production after maintenance downtime.
However, natural gas production declined 4.8% in the quarter after production was disrupted due to the upgrade work at upstream facilities.
In the first-half to June 2015, crude oil production improved 2.2% from a year ago period to 81,499 barrels a day.
Average crude oil prices in the first-half 2015 has declined 47% to US$53.20 from US$100.90 a barrel in the period a year ago.
Despite the disruption, the daily average natural gas production was healthy at a rate of 4,047 million cubic feet in the quarter.
In the first-half, natural gas output declined 5.2%, largely on the sharp fall in output in the second quarter on the upgrade work at the field controlled by British Petroleum.
Manufacturing production declined 0.5% and agriculture output shrank 6.9% in the first quarter from a year ago period.