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- GDP (PPP):
- $26.5 billion
- -1.3% growth
- 0.5% 5-year compound annual growth
- $20,053 per capita
- Inflation (CPI):
- FDI Inflow:
Trinidad and Tobago’s economic freedom score is 62.3, making its economy the 72nd freest in the 2013 Index. Its score is 2.1 points lower than last year, with declines in six of the 10 economic freedoms including financial freedom, business freedom, the control of government spending, and freedom from corruption. Trinidad and Tobago is ranked 14th out of 29 countries in the South and Central America/Caribbean region.
Trinidad and Tobago’s overall score declines have exceeded 2 points for two consecutive years. Dependence on the energy sector for economic growth has hamstrung the country’s competitiveness and held back the emergence of a diversified private sector. A fiscal stimulus package includes additional subsidies, transfers, and investments in state-owned enterprises. The financial sector has undergone a period of uncertainty, and one of the largest financial groups has been bailed out.
Trade and investment freedom have been under threat despite efforts to streamline procedures. Rule of law, especially property rights, has been more strongly maintained. The Caribbean Court of Justice presides in Trinidad and complements a relatively independent judiciary.
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 declared in August 2011 to counter a surge in drug-related violent crime. Robust foreign investment has made Trinidad and Tobago the Western Hemisphere’s largest supplier of liquefied natural gas and one of CARICOM’s largest and most industrialized economies. The size of the economy doubled between 2002 and 2008, and hydrocarbons accounted for more than 40 percent of GDP and 80 percent of exports. However, real GDP growth contracted from 2009–2011 according to the central bank. Despite record low interest rates, investor confidence is weak, and domestic businesses have adopted a cautious approach to investing. Consumer confidence has also suffered.
Property rights are protected under the constitution and common-law practice. Secured interests in property are recognized and enforced. The judiciary is independent and fair, but the case backlog is several years long. Legislation protecting intellectual property is among the hemisphere’s most advanced, but enforcement is lax in some areas. The quality of the bureaucracy remains relatively poor, and corruption is widespread.
Both the top income tax rate and the standard corporate tax rate are 25 percent. Other taxes include a value-added tax (VAT) and a property tax. The total tax burden equals 16 percent of total domestic income. Government spending has risen to 36.3 percent of GDP. The budget produced a small surplus this past year, and public debt hovers around 30 percent of total domestic output.
Despite some progress, the regulatory system lacks transparency and clarity, and regulations are enforced inconsistently. There is no minimum capital requirement, but it takes 41 days to start a company in comparison to the world average of 30 days. The labor market is relatively flexible, facilitating the matching of supply and demand for the country’s highly educated labor force. Inflation has been moderately high.
The trade-weighted average tariff rate is a restrictive 10 percent, and cumbersome non-tariff barriers further increase the cost of trade. Foreign investment in private business is not subject to limitations, but the overall investment regime is not stable enough to drive dynamic growth in long-term investment. The financial sector has been under strain in the aftermath of the collapse of a large financial group and the subsequent bailout.