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- GDP (PPP):
- $44.3 billion
- -1.8% growth
- 0.1% 5-year compound annual growth
- $32,636 per capita
- Inflation (CPI):
- FDI Inflow:
Trinidad and Tobago’s record in advancing economic freedom and enhancing its entrepreneurial climate has been mixed in recent years. Overdependence on oil and gas continues to hold back private-sector development, although there has been some progress in diversification of the economic base, as in the financial sector. Non-oil productivity and job growth have been hurt by an inefficient and nontransparent investment regulatory framework.
The judiciary is relatively independent, and Trinidad and Tobago benefits from a tradition of institutional stability. Nevertheless, lingering corruption and ineffective protection of private property rights undermine prospects for more dynamic long-term economic development.
Trinidad and Tobago is one of the Caribbean’s wealthiest nations. Hydrocarbons account for more than 40 percent of GDP and 80 percent of exports. Prime Minister Dr. Keith Rowley of the center-left People’s National Movement, a geologist by training, took office in September 2015 and was immediately confronted by economic policy challenges stemming from low energy prices and declining natural gas reserves that caused the economy to begin contracting in 2015. Oil production has declined over the past decade as the country has focused on natural gas. In 2016, Trinidad and Tobago’s government bond rating was downgraded because of concern that the government lacks an effective fiscal consolidation strategy.
Property rights are well protected. The judiciary is independent but somewhat subject to political pressures. Rising crime rates and very high levels of violent crime, much of it drug-related, have led to delays in the judicial system. The quality of the bureaucracy remains relatively poor, and narcotics-related graft is endemic in the police force. A long history of corruption and mismanagement under successive governments stretches back to colonial times.
Both the top personal income tax rate and the standard corporate tax rate are 25 percent. Other taxes include a value-added tax and a property tax. The overall tax burden equals 24.7 percent of total domestic income. Government spending has amounted to 37.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.2 percent of GDP. Public debt is equivalent to 51.1 percent of GDP.
The regulatory system lacks transparency and clarity, and regulations are enforced inconsistently, injecting uncertainty into entrepreneurial decision-making and holding back lasting economic development. The relatively flexible labor market facilitates the matching of jobs with available workers. Fuel subsidies have dropped as a result of lower global oil prices, and the government has announced its intention to phase them out completely.
Trade is important to Trinidad and Tobago’s economy; the value of exports and imports taken together equals 60 percent of GDP. The average applied tariff rate is 5.7 percent. The regulatory and judicial systems sometimes impede trade, and numerous state-owned enterprises distort the economy. The financial sector is relatively well developed, with capital markets centered on the stock exchange, and state interference in the sector is not substantial.