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Economists lower T&T’s growth forecasts
Economists have cut their growth forecasts for the T&T economy in 2014, according to a new survey by Barcelona-based FocusEconomics. This follow’s Central Bank Governor Jwala Rambarran’s projection at a December 1 Monetary Policy Forum in Chaguanas that the economy would slow to 0.5 per cent on weaker than expected energy sector performance.
In the December 2014 issue of the Consensus Forecast for Central America and the Caribbean, FocusEconomics revised T&T's 2014 growth forecast down to 1.7 per cent from 2.1 per cent a month earlier. FocusEconomics surveys economists from around the world, including T&T, and publishes forecasts by region.
FocusEconomics said most economies in Central America and the Caribbean decelerated in the first half of the year and more recent data indicate that growth momentum was still sluggish at the outset of the third quarter. The region’s 2014 economic growth is expected to be the slowest since 2011, the economists said. However, growth prospects for next year are still positive.
“The FocusEconomics Consensus Forecast for December reflects stable growth prospects for seven of the 12 economies surveyed. The Dominican Republic and Nicaragua were the only countries for which panelists raised their projections, while Haiti, Panama and T&T experienced downward revisions,” they said.
Panama is still expected to be the region’s fastest growing economy in 2015 with a projected 6.0 per cent gross domestic product (GDP) expansion, followed by the Dominican Republic (4.7 per cent), according to FocusEconomics. At the other end of the spectrum, Puerto Rico is expected to be the worst performer. Panelists foresee the country experiencing a second consecutive year in recession with a contraction of 0.7 per cent.
They project regional GDP to expand 3.1 per cent in 2015, which is in line with last month's forecast. GDP is expected to increase 2.9 per cent in this year, which, if met, will represent the slowest pace in three years. Regional inflation is expected to end 2014 and 2015 at 4.0 per cent, FocusEconomics said. The inflation forecast for 2015 is on par with last month’s estimate.
Giving investors some background, FocusEconomics said: “While the Trinidadian economy recorded zero annual growth in the first quarter of the year, more recent data point to positive economic growth. Preliminary results for the second quarter show that the non-energy sector grew at a healthy pace.”
FocusEconomics said the government has been trying to boost dynamism in the economy by diversifying away from the volatile energy sector, which forms the backbone of GDP.
Meanwhile, Finance Minister Larry Howai announced that falling oil prices would lead government revenue to be less than expected next year, which may result in both a larger fiscal deficit and reduced government spending than initially planned. Inflation rose from September's 7.8 per cent to 9.0 per cent in October, the economists noted. They forecast 2015 GDP to grow around 2.1 per cent, and inflation to end 2014 at 7 per cent, and 2015 at 5.7 per cent.
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