T&T Chops GDP Outlook

The central bank of Trinidad & Tobago slashed its real 2008 GDP growth forecast to 3.5% from 5.6%. It also lowered expectations for 2009 to 2.0% from 5.0%, mainly because of the drop in oil prices. Since energy revenues made up 64% of total government revenues in 2007, JPMorgan and, separately, an IMF mission that visited the Caribbean nation, say they believe the government should cut spending. JPMorgan says the government is expected to announce this week a review of its $7.8bn 2009 budget, which assumes an average price of $70 per barrel of oil and $4 per million BTU for natural gas. The IMF mission says that it is encouraged by the government’s intentions of adjusting fiscal spending in the face of lower energy prices. It also recommends maintaining nominal spending at its fiscal year 2007-08 level, which would translate into spending reductions of some TTD3bn.