Trinidad & Tobago - Economy

Overview: Trinidad and Tobago has a very sophisticated economy for a country of its size, embracing mineral extraction, agriculture, industry, tourism and services, but which 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% in real terms. Although the government had substantial reserves, these were exhausted by 1987, and the economy had to be supported by the IMF 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 industries 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 latter 1990s and 2000s, pausing briefly only in 2001–02, a period of political uncertainty, when the government was distracted from the structural reforms and investor confidence diminished. Then there was strong growth during 2002–2006, peaking at 13.9% in 2003; it was 12.0% in 2006 and 6.0% in 2007, while inflation was generally contained under 10%. Unemployment fell to an all-time low in 2006 of 6.75%.

Trade: Exports of goods and services account for 60% of GDP and manufactured exports for around 35% of total merchandise exports (2004). Main exports are crude petroleum, ammonia, methanol, manufactured goods, food and live animals; main imports are industrial and electrical machinery, manufactured goods, transport equipment and consumer goods. Main trading partners are the USA (70%), Jamaica, France and Barbados for exports, and the USA (28%), Venezuela, Brazil and Germany for imports.

Oil and gas: There are more than 30 producing oil and gas fields, many of them offshore. For a long time after the 1970s there were no very significant fields discovered but exploration in areas off the east coast led to discovery of the large Angostura field in 2001. Oil production then increased from 113,500 barrels a day in 2001 to 144,500 barrels a day in 2005. Exploration has intensified following the Angostura, but offshore fields are costly and slow to be brought on stream. There are two oil refineries: at Pointe-à-Pierre and at Point Fortin.

Trinidad and Tobago has proven natural gas reserves of 532 billion cubic metres (2005) which would last for 13 years. The Atlantic LNG Plant at Point Fortin started to export natural gas in 1999. It was then expanded in stages during the 2000s and the country is among the world’s biggest exporters of LNG.

Manufacturing: 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 a 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.