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- GDP (PPP):
- $43.4 billion
- 1.1% growth
- 0.8% 5-year compound annual growth
- $32,139 per capita
- Inflation (CPI):
- FDI Inflow:
Trinidad and Tobago’s economy relies heavily on oil, which accounts for over half of exports. The country is the world’s largest exporter of ammonia and methanol. Decreases in global oil prices emphasize the need for economic diversification.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 62.9 (down 1.2 points)
- Economic Freedom Status: Moderately Free
- Global Ranking: 73rd
- Regional Ranking: 14th in the South and Central America/Caribbean Region
- Notable Successes: Trade Freedom and Labor Freedom
- Concerns: Rule of Law and Financial Freedom
- Overall Score Change Since 2012: –1.5
Corruption is prevalent in the police force, and the judicial system is subject to frequent delays. Drug-related violence continues. There are many state-owned enterprises, and uncertainty regarding the equal treatment of foreign investors is growing.
Keith Rowley of the People’s National Movement became prime minister in September 2015 after defeating Kamla Persad-Bissessar. Persad-Bissessar and her People’s Partnership coalition government were hit by repeated reports of incompetence, favoritism, and malpractice. 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. Oil production has declined over the past decade as the country has focused on natural gas, but the government is providing fiscal incentives for investments in onshore and deep-water acreage to boost oil reserves. A Heritage and Stabilization Fund established in 2007 as a countercyclical backstop has helped the government to sustain several years of fiscal deficits and survive a recent drop in oil and gas export prices. Financial services and construction have been among the strongest non-energy subsectors. Tourism has the potential for significant growth.
Corruption, much of it drug-related, undermines the business environment and rule of law in Trinidad and Tobago. Narcotics-related corruption in the police force is endemic. The judicial branch is independent but subject to some political pressure and corruption. Rising rates of crime and very high levels of violent crime have produced long delays in the court system. Property rights are well protected.
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 total tax burden equals 28.4 percent of total domestic income. Government spending has risen to 35.5 percent of GDP. The budget deficit has been fluctuating around 3 percent of GDP, and public debt equals about 38 percent of total domestic output.
Despite some progress, the regulatory system lacks transparency and clarity, and regulations are enforced inconsistently. A relatively flexible labor market facilitates the matching of supply and demand for the highly educated labor force. Despite years of fiscal deficits and a recent drop in oil and gas export prices, the IMF has reported that energy subsidies in the government’s expansionary budget rose by 1.6 percentage points of GDP.
Trinidad and Tobago’s average tariff rate is 5.7 percent. Auto parts and jewelry imports are subject to high tariffs. 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 investments. The financial sector has been under strain following the collapse of a large financial group and the subsequent bailout.