Apr 2012 Financial News

IMF forecasts growth for TT in 2012

Apr 03, 2012

REAL ECONOMIC activity in this country is expected to increase by 1.7 percent in 2012. This is the view of the International Monetary Fund (IMF) in its report for 2011. “The economy of Trinidad and Tobago (TT) is turning the corner and growth is expected to resume in 2012 after an extended slowdown lasting three years,” stated the report.

The report pointed out that while in the 2010/11fiscal year the government finances were nearly balanced, “thanks to a strong revenue performance and lower than planned current and capital spending, nevertheless, the deterioration in the non-energy balance implied a large fiscal stimulus. The debt to GDP ratio has significantly risen from 25 percent of GDP in 2008 to 33 percent in 2011.”

However, it continued, “In the face of subdued inflation, the Central Bank of TT (CBTT) has maintained an accommodative monetary policy lowering the policy rate by 75 basis points since end-2010 to three percent.”

On the performance of commercial banks, the report stated, that after a decline which lasted 20 months, commercial bank credit to the private sector had been “noticeably more dynamic since mid- 2011 (five percent growth in November year on year), consistent with the non-energy sector recovery.”

It added, “Commercial banks remain well capitalised, profitable and liquid. The banking system’s non-performing loans (NPLs), after peaking at 7.6 per cent of total loans in August 2011, have declined to 6.4 percent in November and remain low by regional standards.

Alluding to the Clico fiasco and the manner in which it was handled by Finance Minister Winston Dookeran, the Report stated, “Following the collapse of the CL Financial Group and its insurance subsidiary, Clico, significant progress has been made in compensating Clico claimants. Nevertheless, vulnerabilities remain, largely reflecting the still fragile confidence.”

According to the report, “A range of indicators point to a broad turnaround in the non-energy sector beginning in the second half of 2011. Real GDP is estimated to have contracted by 1.3 percent in 2011 mainly reflecting production disruptions in the energy sector and a lacklustre performance in the non-energy sector.

“Inflation has picked up, rising from a historic low of 0.6 percent in August 2011 to 6.8 percent in January 2012 as food prices increased. However, core inflation remained low at 1.8 percent in January. Unemployment has remained moderate 5.8 percent in mid-2011. The current account surplus rebounded strongly to 20 percent of GDP in 2010 and an estimated 21 percent in 2011 from eight percent in 2009, stemming mainly from the improvement in oil prices and a recovery in non-energy exports. Gross official reserves reached (US)$9.8 billion (over 13 months of imports) at end-December 2011,” added the report.


Source:
By Vernon Khelawan
Newsday
Tuesday April 3, 2012

http://www.newsday.co.tt/business/0,157922.html