Down town Port of Spain, Trinidad.
The economy of Trinidad and Tobago is exhibiting signs of economic recovery according to reports out of the country’s central bank.
According to the bank, “activity in the energy sector continued to pick up in the second quarter of 2018. Natural gas production benefitted from implementation of the Juniper project with positive spillovers to methanol output. Recent data show a reversal of the trend of falling cement sales, but it is too early to tell whether this represents the start of a recovery in construction and in the non-energy sector as a whole. Meanwhile, price pressures stayed well contained, with headline inflation registering 1.1 percent in August 2018.”
“Lending to the private sector continued to grow in 2018, reaching 7.1 percent in July (year on year), reflecting mainly loans for refinancing and debt consolidation, with credit to businesses rising by a more modest 2.7 percent. Over the first half of the year, there was a 1.2 percent decline in the interest spread of commercial banks, the result of a simultaneous decrease in the average lending rate alongside a rise in the average deposit rate.”
The central further stated that, “in the third quarter, following the increase in the Central Bank’s repo rate in June, there is initial evidence of transmission to other rates—with announcements by some banks, of increases in their prime lending rates as well as higher term deposit rates.”
Trinidad Cement
“There was a temporary spike in excess reserves of commercial banks at the Central Bank in July-August in the context of widespread investor interest in a public sector bond arrangement. The Central Bank’s removal of the 2 per cent secondary reserve requirement on banks’ deposit liabilities in August also boosted liquidity. This action was in keeping with the Bank’s objective to progressively rely on more market-based policy measures, including open market operations.”
“In its deliberations, the Monetary Policy Committee (MPC) took note of the domestic situation, including the growth that remained concentrated in the energy sector, the low inflation numbers and the gradual transmission of the June 2018 repo rate increase. The Committee also observed the ongoing normalization of monetary policy in the US and wider trade and growth developments. Taking all factors into consideration, the MPC decided to maintain the repo rate at 5 percent.”