PORT OF SPAIN, Trinidad – The Central Bank of Trinidad and Tobago (CBTT) says that real gross domestic product (GDP0 grew by three percent in the first quarter of this year.
In its Monetary Police Statement, the bank said that the data from the Central Statistical Office (CSO) reflects a strong expansion in the non-energy sector (4.2 percent) accompanied by marginal growth in the energy sector (0.3 percent).
According to the CBTT, in the second quarter of 2023, indicators monitored by it point to a steady rise in activity in major non-energy sectors including transportation and storage, wholesale and retail trade, excluding energy, electricity and water, excluding gas and construction.
The CBTT said that unemployment rate increased to 4.9 percent in the first quarter of 2023 from 4.7 percent in the fourth quarter of 2022. It said headline inflation eased further in August 2023 to 4.1 percent year-on-year, down from 4.7 percent recorded in July 2023.
The deceleration in headline inflation came from slower price movements in food as core inflation remained unchanged. Food inflation slowed to 5.6 percent while core inflation which excludes food items remained at 3.7 percent.
The CBTT said that the steady growth momentum in credit continued in the second quarter of 2023 as overall financial system credit grew by 7.8 percent in the 12 months to June 2023, up from 6.4 percent in March 2023.
It said the main loan subcategories all accelerated with business lending to 7.3 percent, consumer loans to 8.1 percent, and real estate mortgage loans to 6.3 percent.
“Banking system liquidity remained elevated thus far for the year, with commercial banks’ reserves at the Central Bank in excess of required levels reaching a daily average of TT$6.3 billion (One TT dollar=US$0.16 cents) by the end of August 2023.”
The Central Bank said that the differential between short term interest rates in Trinidad and Tobago and the United States narrowed as domestic rates edged up and the Fed paused its rate increases.
It said the differential on 3-month treasuries (TT/US) reached -464 basis points in August 2023 from -476 basis points in May 2023. Meanwhile on the longer term, the 10-year differential moved to +107 basis points from +153 basis points over the same period.
“In its deliberations on international developments, the Monetary Policy Committee (MPC) noted the continued uncertainty on the global inflation front and the impact that future monetary tightening may have on the TT/US interest differential.
“The Committee considered that domestically, the buoyancy in private sector credit, alongside the sustained deceleration in inflation, were helping to foster a steady revival of economic activity without demand pressures at this time.”
It said taking all factors into consideration, the MPC agreed to hold the repo rate, the rate at which the commercial bank will repurchase the securities, at its current level of 3.50 percent.
