Spur by lower energy prices

International ratings agency, Fitch Solutions is forecasting a fall in Trinidad and Tobago’s (T&T’s) trade surplus for 2023 and 2024.

Fitch projects that the current account surpluses for 2023 will fall to 11.2 per cent of Gross Domestic Product (GDP) and by 10.8 per cent of GDP for 2024, coming from 18.3 per cent of GDP in 2022. 

While this marks a fairly sizable fall in the size of the surplus compared to its 2022 estimate, Fitch notes that its forecasts are largely consistent with the 10-year (2012-2021) average historical surplus of 7.8 per cent. 

This will be the result of a narrower surplus in the goods trade, as global energy prices fall from a multi-year high recorded in 2022. Energy products typically account for four-fifths of T&T’s goods exports, making the trade balance highly susceptible to changes in global energy prices.

The services trade deficit, meanwhile, will decline as tourist arrivals continue to approach pre-pandemic levels. International tourist arrivals have yet to reach the pre-pandemic (2017-19) average of 32,186 monthly visitors, having averaged only 18,874 in 2022 according to the UN World Tourism Organization (UNWTO). 

This indicates that tourist arrivals still have room to continue growing in 2023 and 2024, though Fitch contends that the pace of such recovery will face headwinds stemming from slow growth in tourist-origin markets like the US. 

Despite the lower current account surplus, Fitch asserts that risks to T&T’s external position are small given its position, as a net creditor to the rest of the world and adequate foreign reserves.