Oil has fuelled Trinidad and Tobago's economic boom

A daily diet of murders and shootings competed for attention with local concerns about the international financial meltdown.

"Big trouble ahead" headlined Newsday, "Trinis hit hard", sighed the Trinidad Express.

They were reporting on unfavourable assessments from local and foreign experts.

The two-island republic, the strongman of Caribbean economies, has found that oil riches alone can't withstand global shocks.

In 2007, the country's energy sector contributed 45 percent of GDP.

The government gets 64.4 percent of its revenues and 78 percent of foreign exchange earnings from the energy sector.

	Workers are expected to press for higher pay

Strongest credit ratings

"Trinidad and Tobago is better placed than many countries to weather the international financial crisis, but is not immune from contagion," the IMF said this week after a mission to Port of Spain.

By any account, the Trinidad and Tobago economy has chalked up impressive statistics this decade.

The IMF reports that during 2002-07, real GDP growth averaged 9 percent; per capita income doubled in US dollar terms; both the unemployment rate and the public debt ratio were halved; and the country became a net external creditor, with one of the strongest credit ratings in the region.

At the same time, record high energy prices fueled government spending, with one downside felt in rising food prices, to double-digit inflation.

The good days may not necesssarily be over but the worldwide economic downturn has forced the authorities to take stock.

The Central Bank has slashed its growth forecasts to 3.5 percent this year (from 5.6%) and 2 percent (from 5%) in 2009, citing falling prices for the country's main exports of oil, natural gas and petrochemicals.

Prime Minister Patrick Manning has already conceded that the government would have to revise its budget.

	Trinidadians are known to love a party, whatever the economic circumstances

Food-driven inflation

It had budgeted for oil being at US$70 per barrel; the price has now gone below $60.

The IMF mission said the Manning administration will have to cut its spending.

Central Bank Governor Ewart Williams said his biggest concern was reducing the food-driven inflation rate of 14.8 percent to single digit.

He said a significant percentage of the price increases comes about because the country is not producing sufficient of its food.

He has also been calling attention for some time to the massive government spending, which has been driving up demand for goods and services.

In such circumstances, the governor fears that trade unions will demand higher wages, that will serve to further increase prices.

The president of the National Trade Union Centre Michael Anisette has acknowledged that labour may have no other choice.

Low jobless figure

He said: "The reality is that the purchasing powers of each over the last five years and every worker in Trinidad and Tobago have been eroded."

Bank governor Williams also said businesses were becoming concerned about the impact of budget adjustments on domestic demand and declining export demand in Caricom, a key export market.

Even as the real estate market softens and consumer confidence weakens, one factor remains strong -- unemployment remains low, currently at 4.6 percent.

Its still a picture that its neighbours can only dream of.