Trinidad and Tobago’s economy showed signs of moderation during the first three quarters of 2025, as weaker activity in the non-energy sector weighed on overall performance. According to the Central Bank’s latest Annual Economic Survey, real GDP expanded marginally over the period, supported by growth in the energy sector that offset declines elsewhere in the economy.

The energy sector remained the primary driver of growth, reflecting both base effects from earlier maintenance activity and the start-up of production at new natural gas fields. This improvement helped to sustain overall output, even as non-energy industries experienced contraction, highlighting the continued dependence of the economy on energy-related activity.

Labour market conditions remained relatively stable, with unemployment averaging 4.5 per cent over the period, slightly lower than the previous year. This improvement was supported by an increase in employment alongside a decline in the number of persons without jobs. However, the labour force contracted, and participation rates remained largely unchanged, suggesting underlying weaknesses. Employment gains were concentrated in sectors such as wholesale and retail trade, hospitality, and manufacturing.

A broader assessment of labour market indicators presents a more mixed picture. While fewer layoffs were recorded, a decline in job advertisements points to softer hiring activity. This suggests that, although employment levels have stabilised, momentum in job creation may be slowing.

Inflation remained contained throughout 2025, with headline inflation rising modestly compared to the previous year. This increase was driven by higher food prices as well as a gradual uptick in core inflation. Despite this, overall price pressures remained relatively low, providing a supportive environment for economic stability.

Fiscal performance improved over the period, supported by stronger energy revenues. Higher receipts from the energy sector outpaced increases in government spending, resulting in a smaller fiscal deficit than initially projected. Revenue growth was driven largely by energy-related inflows, while expenditure rose moderately due to increased spending on transfers, subsidies, and goods and services.

The fiscal deficit was financed through a combination of domestic and external borrowing, along with withdrawals from the Heritage and Stabilisation Fund. At the same time, government debt levels increased compared to the previous year, reflecting continued financing needs despite the improvement in fiscal balances.

Monetary policy remained accommodative, with the Central Bank maintaining the repo rate at 3.5 per cent to support domestic economic activity. Liquidity conditions tightened at times due to government borrowing, but the Central Bank managed this through open market operations to ensure adequate liquidity in the financial system. As a result, commercial banks’ excess reserves increased toward the end of the year.

On the external front, Trinidad and Tobago recorded a deficit in its external accounts during the first nine months of 2025. This reflects ongoing pressures on the balance of payments, even as stronger energy earnings provided some support.

The economic outlook reflects a balance between resilience in the energy sector and emerging challenges in the broader economy. While key indicators point to stability, underlying weaknesses in non-energy activity and the labour market highlight the need for more diversified and sustained growth.

Source: (Trinidad Express)

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