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- GDP (PPP):
- $26.7 billion
- 0.4% growth
- -0.6% 5-year compound annual growth
- $20,087 per capita
- Inflation (CPI):
- FDI Inflow:
Trinidad and Tobago’s economic freedom score is 62.7, making its economy the 73rd freest in the 2014 Index. Its score is 0.4 point higher than last year due to improvements in trade freedom, business freedom, and freedom from corruption that outweigh a deterioration in financial freedom. Trinidad and Tobago is ranked 14th out of 29 countries in the South and Central America/Caribbean region, and its score is above the world average.
Trinidad and Tobago’s economic freedom was first assessed in the 1996 Index, and its score has declined since then by 6.5 points. Despite double-digit score growth in trade freedom and fiscal freedom, serious deteriorations in rule of law, regulatory efficiency, and market openness have kept the once “mostly free” economy among the “moderately free” since 2008.
Dependence on the energy sector for economic growth has undermined competitiveness and private-sector diversification. Fiscal stimulus has included additional subsidies, transfers, and investments in state-owned enterprises. The financial sector has undergone uncertainty and a bailout of one of the largest financial groups. Trinidad and Tobago continues to score below the world average in freedom from corruption, business freedom, and trade freedom.
In late 2011, police thwarted a plot to assassinate Prime Minister Kamla Persad-Bissessar and members of her cabinet. The plot was linked to the state of emergency she declared in August 2011 to counter a surge in drug-related violent crime. Trinidad and Tobago’s economy has traditionally been agriculturally based, but a shift to petrochemical, liquefied natural gas, and steel production has made it one of the most developed nations in the Caribbean. The economy doubled between 2002 and 2008, with hydrocarbons accounting for more than 40 percent of GDP and 80 percent of exports. Tourism also has the potential to grow significantly, making Trinidad and Tobago a promising place for investors.
The country is believed to suffer from high-level corruption, much of it drug-related, which extends to the business community and includes money laundering through front companies. Narcotics-related corruption in the police force is endemic. The judicial branch is independent but subject to some political pressure and corruption. Rising crime rates have produced a severe backlog in the court system. Property rights are well protected.
The top individual income and corporate tax rates are 25 percent. Other taxes include a value-added tax (VAT) and a property tax. Overall tax revenue equates to about 16.5 percent of gross domestic income. Government spending amounts to 35 percent of GDP. Public debt is equivalent to about 40 percent of the overall size of the economy. Oil and gas reserves continue to help support public finances.
There is no minimum capital requirement, but it takes over a month to incorporate a business. The process for obtaining necessary permits remains time-consuming and takes over seven months on average. The labor market is relatively flexible, facilitating the matching of supply and demand. The IMF reported in 2013 that subsidies are on an unsustainable path, with fuel subsidies particularly difficult to justify.
The average tariff rate is 5.7 percent. Customs procedures have been modernized in recent years. A license is required for foreign ownership of land. Modernization of financial regulations is ongoing. State influence in the financial sector is not substantial, and a wide variety of financing instruments are available. The financial sector has been under strain in the aftermath of the collapse of a large financial group and the subsequent bailout.