2013-12-08 13:52:55 - Recently published research from Business Monitor International, "Trinidad & Tobago Business Forecast Report Q1 2014", is now available at Fast Market Research
Slightly stronger real GDP growth in Trinidad & Tobago during the first half of 2013 has reinforced our view that the twin islands' economic recovery will continue at a moderate pace in the coming months, primarily on the back of a rise in non-energy output. Moreover, we expect that increased short-term investment in the country's energy sector due to recent tax reform will also bolster the economy through 2014.
We believe that the central Bank of trinidad & tobago (cBtt) will keep the trinidad & tobago dollar (ttd ) trading sideways over the coming months, within the tightly managed ttd 6.32-6.42/us$ range it has occupied since January 2011. Moreover, our core view is that trinidad & tobago's exchange rate will stay
within its current trading range through 2014 and into 2015, given the country's stable balance of payments of position and robust stock of foreign reserves.
stronger economic growth will lead the central Bank of trinidad & Tobago to shift its policy bias from growth towards addressing inflation concerns in 2014, and we forecast 50 basis points of hikes to the benchmark interest rate to 3.25%. indeed, we believe that a rise in core inflation indicates strengthening demand-pull price pressures, and we have revised up our 2014 average inflation forecast.
Full Report Details at
- www.fastmr.com/prod/751987_trinidad_tobago_business_forecast_rep ..
Major Forecast changes
While the pace of t&t's economic recovery will remain modest, we believe that a rise in inflation will prompt the central bank to shift its policy bias towards controlling demand-pull price pressures, and we have revised up our 2014 average inflation forecast from 6.5% to 7.0%.
Partial Table of Contents:
Major Forecast changes
chapter 1: political outlook
BMi political risk ratings
political risk analysis
Local election results Highlight Vulnerabilities of ruling coalition
- the ruling united national congress (unc) party's poor showing in local elections on october 21 will negatively affect Prime Minister Kamla Persad-Bissessar's ability to make policy through the remainder of her term to May 2015. Moreover, we believe that the success of former national security Minister Jack Warner's newly-formed independent liberal Party in siphoning votes away from the unc increases the potential that the opposition People's national Movement will win the next general election in 2015.
taBLe: poLitica L oVerVie W
chapter 2: economic outlook
BMi economic risk ratings
Q213 Data reinforces Moderate economic recovery View
- Slightly stronger real GDP growth in Trinidad & Tobago during the first half of 2013 has reinforced our view that the twin islands' economic recovery will continue at a moderate pace in the coming months, primarily on the back of a rise in non-energy output. Moreover, we expect that increased short-term investment in the country's energy sector due to recent tax reform will also bolster the economy through 2014.
taBLe: MacroeconoMic Data anD Forecasts
rate Hikes Likely in 2014
- stronger economic growth will lead the central Bank of trinidad & tobago to shift its policy bias from growth towards addressing inflation concerns in 2014, and we forecast 50 basis points of hikes to the benchmark interest rate to 3.25%. Indeed, we believe that a rise in core inflation indicates strengthening demand-pull price pressures, and we have revised up our 2014 average inflation forecast.
taBLe: MonetarY poLicY
Stimulus Spending To Widen Deficit
- The Trinidadian government's 2014 budget has reinforced our view that the country's budget balance will remain in deficit. Indeed, rising government expenditures, intended to stimulate the incipient economic recovery, will weigh on Trinidad & Tobago's fiscal accounts next year. Moreover, we believe that rising government bond yields will increase the cost of financing the deficit, and could see public debt levels elevate in the coming years.
taBLe: F isca L poLicY
Balance of payments
external position to strengthen in the near term
- Trinidad & Tobago's external position will remain strong in the coming years, as a current account surplus helps to cover a financial and capital account deficit. Indeed, we believe that stronger growth in energy exports in the short term, combined with a moderating income account deficit as reinvested earning by foreign companies fall, will see the curr ent account remain in the black.
taBLe: current account
exchange rate policy
ttD: exchange rate Will remain range Bound
taBLe: eXcHanGe rate
taBLe: currencY Forecast
Limited Banking sector Growth potential in the Long term
- improving macroeconomic conditions and low interest rates will see asset growth rise in the coming months. However, high banking sector penetration and limited scope for stronger G dP growth mean we see very moderate asset growth ahead.
chapter 3: 10-Year Forecast
the trinidad & tobago economy to 2022
Major challenges remain
- Given a mixed outlook for the energy sector, we expect economic growth to expand at an annual rate of 3.3% over 2013-2022 - significantly slower than the 7.6% rate achieved between 2000 and 2008. The non-energy sector should continue to grow, thanks to government efforts to diversify the economy, although we doubt it will be enough to overcome a series of structural problems - most notably, capacity constraints and labour shortages - that will constrain economic growth overall.
taBLe: LonG-terM Macroecono Mic Forecasts
chapter 4: Business environment
BMi Business environment risk ratings
Business environment outlook
taBLe: BM i Business anD operation risk ratinGs
taBLe: BM i Le GaL Fra MeWork ratinG
Full Table of Contents is available at:
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