Macroeconomic Forecast Trinidad & Tobago

June 2007 | Macroeconomic Forecasts

BMI View: While booming energy revenues have generated an overall fiscal surplus, a sustained increase in government expenditures have given rise to a large deficit on the 'non-energy' budget account. The central bank has estimated this deficit at about 14.4% of GDP in 2006. It is expected to peak at about 16% of GDP in 2007. The ratings agency Standard & Poor's (S&P) recently expressed concern about the growth of the non-energy deficit, particularly as global energy prices soften. The IMF has repeatedly warned that a non-energy deficit above 10% is not sustainable in the medium term. The government expects this deficit to decline from 2008 as new investments boost activity (and fiscal revenues) in the non-oil economy. However, any further deterioration beyond 2008 would certainly give cause for concern, not least for its continued inflationary effects. It could also jeopardise Trinidad's coveted

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