Dim Macro Growth Outlook for Trinidad and Tobago in 2023

• Fitch forecasts a slight deceleration in growth for Trinidad and Tobago from its 2022 estimate of 2.7% to 2.2% in 2023. This is broadly consistent with the latest data points which show that real GDP grew just 2.5% y-o-y in Q322, compared to 5.7% in Q222, and is underpinned by Fitch’s expectation of still-high inflation and fairly weak export growth in the quarters ahead.
• Notably, most of the deceleration will be driven by private consumption which, despite a solid labour market, will suffer from high inflation impacted by lower energy subsidies. Private consumption growth will contribute just 1.8 percentage points (pp) to headline real GDP growth in 2023, compared to 2.7 pp in 2022. 
• Net exports, meanwhile, will serve as a drag on headline growth given a somewhat bleak outlook for US growth and limited hydrocarbon production growth in 2023. Fitch forecasts that net exports will reduce headline real GDP growth by 0.3pp in 2023, compared to a 1.0pp reduction in 2022.
• Overall, Fitch believes that real GDP growth will average just 1.9% between 2024-2027, largely weighed down by a poor medium-term outlook for exports. Notwithstanding, inflation pressures are expected to ease over time coupled with the full recovery in tourist arrivals, which will help keep private consumption growth somewhat elevated in the medium term.

(Source: Fitch Solutions)