By Durrant Pate

The International Monetary Fund (IMF) now expects the economy of Trinidad and Tobago to decline by a massive 5.6 per cent, which is a much larger contraction than it had originally predicted.

The IMF’s new forecast of economic contraction in the twin-island republic reflects a 1.1 per cent higher rate of decline from the 4.5 per cent contraction than what it had originally projected back in April this year. The projected fall in the country’s gross domestic product (GDP) by the IMF is much lower than what the country’s finance minister, Colm Imbert, predicted.

Speaking in his budget presentation, Imbert contended that T&T’s output is projected to contract in real terms by 6.8 per cent in 2020, with recovery driven by an emerging digital economy and a recovering global economy expected by 2022. One the positive side, the projected decline in T&T’s economy for 2020 is among the lowest in the Caribbean.

In its World Economic Outlook for October 2020, the IMF indicated that T&T’s contraction is better than that projected for some of its Caribbean neighbours. According to the World Economic Outlook for October 2020 titled, A Long and Difficult Ascent, “many Caribbean countries, except Guyana (expected to grow by 26.2 per cent), were given deeper declining forecast when compared with T&T”.

In highlighting the cases of 10 Caribbean countries, the publication stated: “For example, the IMF indicated steeper declines for the Bahamas ( -14.8), Barbados (-11.6 per cent), Belize (-16 per cent), Dominica (-8.8), Grenada (-11.8 per cent), Jamaica (-8.6 per cent), St Kitts and Nevis (-18.7 per cent), St Lucia (-16.9 per cent), St Vincent and the Grenadines (-7 per cent) and Suriname (-13.1 per cent).”

Nonetheless, while T&T’s downward projection for 2020 is not as deep as many other Caribbean countries, the IMF’s data signals that it is expected to grow at a slower rate when compared to most of these other Caribbean countries in 2021 up to 2025. T&T’s real GDP growth rate forecasted by the IMF is one of the lowest in the Caribbean for 2021 and 2025, with a projection of 2.6 per cent next year and 1.5 per cent in 2025.

Meanwhile, for the years 2020 and 2025, the IMF indicated the growth expectation of these other Caricom countries. Barbados is expected to grow by 7.4 per cent in 2021 and 1.8 per cent in 2025, Belize (eight per cent and two per cent), Jamaica (3.6 per cent and 2.1 per cent), St Kitts and Nevis (eight per cent and 2.7 per cent) and St. Lucia (7.2 per cent and 1.8 per cent).

For the region of Latin America and the Caribbean as a whole, the IMF revised the size of the contraction upward from the June forecast of -9.4 per cent to -8.1 per cent. The region is expected to return to positive growth in 2021 with a real GDP projection of 3.6 per cent.

Commenting on the IMF global growth projections, its economic councillor, Gita Gopinath, remarked that, “we are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast”.

Gopinath indicated that the revision is driven by second quarter GDP outturns in large advanced economies, which were not as negative as the IMF had projected.

The IMF’s October global growth outlook for 2020 stands at -4.4 per cent (-4.9 per cent in June) and 5.2 per cent in 2021.