Economy of Trinidad and Tobago
KEY FACTS 2015
GNI: US$24.0 billion
GNI p.c.: US$17,640
GDP growth: –0.6% p.a. 2011–15
Inflation: 4.7% p.a. 2011–15
Trinidad and Tobago has a very sophisticated economy for a country of its size, embracing mineral extraction, agriculture, industry, tourism and services, but it is underpinned by a single commodity – oil, which was first discovered in 1866. The high price of oil in the 1970s allowed considerable publicly financed development, but when the price fell in the 1980s the economy faltered badly. In the recession years (1985–89), GDP fell by 30 per cent in real terms. Although the government had substantial
reserves, these were exhausted by 1987 and the economy had to be supported by the International Monetary Fund until 1993, when oil prices had recovered.
In the late 1980s, a programme of privatisation was under way and continued through the 1990s. At the same time industries based on natural gas, tourism and other service sectors were developed. Tax receipts have been rising through more efficient collection, though many tax rates have been cut.
With the new industries on stream and oil prices strong, the economy was buoyant in the second half of the 1990s into the 2000s, pausing briefly only in 2001–02, a period of political uncertainty, when the government was distracted from structural reforms and investor confidence diminished. Then during 2002–06 the economy grew at ten per cent p.a., moderating to 4.8 per cent in 2007. In the global economic downturn of 2008–09, demand for Trinidad and Tobago’s manufactures weakened sharply and the economy shrank by 4.4 per cent in 2009; it stood still in 2010, contracted by a further 1.6 per cent in 2011 and recovered modestly in 2012–14. Unemployment, which had fallen to an all-time low of 4.6 per cent in 2008, rose rapidly in 2009–12.
Manufacturing and process industries are centred on the free-trade zone. The government established joint ventures with foreign companies to produce iron and steel, petrochemicals, cement, ammonia and other nitrogenous fertilisers, urea and methanol. Plans for construction of an aluminium smelter funded by China were announced in 2008. This followed rejection of US-based Alcoa’s plans for a large smelter, which were successfully challenged by environmentalists.
Trinidad and Tobago’s natural gas has high methane content with few impurities and is very suitable for methanol and ammonia production. The Point Lisas industrial estate has seven large, modern methanol plants, nine ammonia plants and a urea plant, with more under development, and the country is among the world’s largest exporters of both methanol and ammonia.
It also assembles motor vehicles and produces consumer durables, such as television sets and gas cookers, and clothing, and there is a significant printing industry.