Trinidad and Tobago Trade Surplus Will Fall On Lower Energy Prices, Though External Risks Are Minimal

• Fitch forecasts a fall in Trinidad and Tobago (T&T)’s 2023 and 2024 current account surpluses to 11.2% of GDP and 10.8% respectively, from its 2022 estimate of 18.3%.
• While this marks a fairly sizable fall in the size of the surplus compared to its 2022 estimate, Fitch notes that its forecasts are largely consistent with the 10-year (2012-2021) average historical surplus of 7.8%. 
• This will be the result of a narrower surplus in the goods trade, as global energy prices fall from a multi-year high recorded in 2022. Energy products typically account for four-fifths of T&T’s goods exports, making the trade balance highly susceptible to changes in global energy prices.
• The services trade deficit, meanwhile, will decline as tourist arrivals continue to approach pre-pandemic levels.
• International tourist arrivals have yet to reach the pre-pandemic (2017-19) average of 32,186 monthly visitors, having averaged only 18,874 in 2022 according to the UN World Tourism Organization (UNWTO). This indicates that tourist arrivals still have room to continue growing in 2023 and 2024, though Fitch notes that the pace of such recovery will face headwinds stemming from slow growth in tourist-origin markets like the US. 
• Despite the lower current account surplus, Fitch asserts that risks to T&T’s external position are small given its position as a net creditor to the rest of the world and adequate foreign reserves.

(Source: Fitch Solutions)