PORT OF SPAIN, Trinidad – The Central Bank of Trinidad and Tobago (CBTT) says the trend of sluggish non-energy sector activity may have persisted during the second quarter of 2025.
Indicators monitored by the Central Bank suggest that the continued positive performance of the distribution sector, albeit at a slower pace, may have been countered by tepid activity in the construction and manufacturing sector,” the CBTT said in its Monetary Policy Announcement for Septembe
The CBTT said that according to data from the Central Statistical Office (CSO), real gross domestic product (GDP) contracted by 2.1 per cent year-on-year during the first quarter of 2025, with output declines in both the energy and non-energy sectors of 4.8 per cent and one per cent, respectively.
It said preliminary data from the Ministry of Energy and Energy Industries suggests mixed performances heading into the second quarter.
In April this year, the production of natural gas fell by 2.1 per cent year-on -year, while crude oil production registered a small increase of 0.3 per cent. The petrochemical industry recorded expansions in ammonia (6.9 per cent) and urea (26.7 per cent), but there was a notable decline in methanol output (-28.1 per cent).
The CBTT said that domestic price pressures remain relatively contained. Headline inflation, as measured by the CSO’s Consumer Price Index, measured 1.4 per cent year-on-year in August this year, unchanged from the rate three months earlier.
It said core inflation, which excludes food prices, rose marginally to one per cent while food price increases, influenced by a decline in vegetable prices, decelerated to 2.9 per cent. Building material prices and wholesale prices rose by 2.4 per cent and 1.2 per cent year-on-year, respectively, in the second quarter of 2025.
The central bank said that financial conditions were broadly favourable but market liquidity continued to be somewhat volatile.
It said commercial banks’ excess reserves at the Central Bank averaged TT$4.2 billion (One TT dollar=US$).16 cents) in August 2025, before slipping to TT$3.9 billion in the first half of September 2025.
Liquidity conditions have been impacted by government financing operations, robust credit growth and (indirectly) by central bank sales of foreign exchange to authorised dealers. The CBTT said tighter liquidity appeared to affect the pace of credit expansion. Overall financial sector private sector credit rose by 7.7 per cent year-on-year in July 2025, down from growth of 9.1 per cent in April 2025.
Business credit expanded by 8.1 per cent, driven by loans to the distribution, finance and manufacturing sectors. Consumer lending grew by 9.9 per cent, but there was a slowdown in loans for motor vehicles and bridging finance. Real estate mortgage loans increased by 6.3 per cent.
The CBTT said that the Monetary Policy Committee (MPC) has noted that global economic uncertainty appears more acute, especially with geopolitical tensions rising in the territorial spaces adjacent to Trinidad and Tobago.
“While inflation is likely to remain low in the near-term, growth prospects seem tentative. The anticipated boost to energy production in the second quarter of 2025 from two new natural gas fields may be countered by lacklustre non-energy sector activity. Credit growth may continue to moderate and labour market conditions may loosen, both likely to be impacted by the restructuring of government employment programmes.
“These factors point to some moderation in aggregate demand. On the external accounts, pressures may moderate as tariff uncertainty eases with further trade agreements. Further, short-term interest rate differentials are likely to improve should softer labour conditions persist in US, forcing the US Fed to lower its monetary policy rate and at a faster pace.”
The CBTT said that taking all these factors into account, the MPC agreed to maintain the repo rate at 3.50 per cent.
