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Economic recovery starting in T&T, says Central Bank


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Economic recovery starting in T&T, says Central Bank
Aerial view of Port of Spain, Trinidad - GP

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PORT OF SPAIN – The Central Bank of Trinidad and Tobago (CBTT) on Friday said business operations are starting to recover following the gradual opening of the economy since the third quarter, adding that it is a “signal of cautious optimism for 2022 if such momentum is maintained”

In its Monetary Policy statement, the CBTT said that with respect to financing, business credit rose by 1.3 per cent year-on-year in October 2021, the first increase since August 2018.

It said recent lending was particularly buoyant to the construction, finance and insurance sectors, alongside the 4.6 per cent rise in mortgage lending.

However, consumer lending contracted by 2.3 per cent, despite a slight decrease in interest rates, the weighted average lending rate of commercial banks declined to 7.04 per cent in September 2021, 16 basis points lower than in March 2021, the CBTT said.

But it noted that financial system liquidity remained “ample”, with banks’ excess reserves at the Central Bank averaging TT$7.37 billion(One TT dollar=US$0.16 cents) during the first half of December 2021.

In addition, the interest rate differential between Trinidad and Tobago and United States 90-day treasury securities was relatively stable at around 27 basis points since June 2021.

The CBTT said that following a lag of several months, external price pressures are currently having a direct and broad-based bearing on domestic inflation. It said headline inflation measured 3.9 per cent year-on-year in October 2021 compared with 2.4 per cent a month earlier.

The bank said food inflation surged to 7.6 per cent from 5.8 per cent in September and is likely to rise further given the situation in global grain markets. Core inflation, which excludes food items, almost doubled to 2.9 per cent from the previous month.

It said stronger price pressures were also observed for building materials, with the Index of Building Material Prices rising by 12.6 per cent during the third quarter of 2021 when compared to the same quarter a year earlier. (CMC)