Falling Export Receipts Will See Trinidad and Tobago’s Current Account Surplus Normalise in 2024 & 2025

  • Fitch Solutions forecasts that Trinidad & Tobago’s (T&T) current account surplus will narrow from 12.1% of GDP in 2023 to 5.6% and 6.7% in 2024 and 2025, respectively.
  • In recent years, T&T has benefitted from a surge in global energy prices, especially following Russia’s invasion of Ukraine in February 2022. In 2022, surging energy prices helped the current account surplus to jump to 17.5% of GDP, the highest since 2013.
  • However, the surplus has narrowed considerably in recent quarters, in line with the normalisation of global energy prices. Despite rising tensions in the Middle East, Brent crude oil prices have trended down, with Fitch’s Oil & Gas team revising its average forecasts for 2024 and 2025 to USD81/bbl1 and USD78/bbl (from USD85/bbl and USD82/bbl previously). Given these dynamics, Fitch has revised its current account projections, forecasting narrower surpluses in the coming years, although still wider than the 2015-2019 average of 4.2% of GDP.
  • Going forward, falling energy prices will constrain export receipts, while robust household spending and an uptick in fixed investment will buoy demand for imported consumer and capital goods.
  • Despite the narrowing surplus, Fitch foresees limited risks to Trinidad & Tobago’s external sector, with import coverage remaining well above the IMF’s minimum recommended threshold of 3.0 months.

________________

1 In the oil industry, bbl refers to a barrel of crude oil or 42 gallons.

(Source: Fitch Solutions)