1. NS4540 Winter Term 2017 Trinidad Economy
Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

2. Overview
Robert Looney, “Once a Caribbean success story, Trinidad and Tobago faces an uncertain future,” World Politics Review, January 13, 2017
Trinidad by far the wealthiest country in the Caribbean
History of booms and busts centered on oil prices
Country currently mired in a severe recession with the 2014 oil price collapse
Oil and gas make up about 40% GDP and 80% exports
In last bust economy contracted at average annual rate of 4.7% from 1983 to 1989
Higher oil prices in 2000s resulted in growth averaging 6.5%
Non-hydrocarbon is incapable of carrying he economy on its own
Government now has a stabilization fund buffeting the current recession, so not as bad is in the 1980s

3. Trinidad Crisis I
Today Trinidad faces environment much less conducive to a solid recovery
Since 2000 a marked increase in
Crime and violence
Corruption, and
Ethnic tensions
Country home to large groups of East Indians and Africans
Tensions have fed violent extremism marginalizing Muslims (about 8% of population)
Many fear this economic and social deterioration can not be easily reversed or even halted if oil markets recover

4. Trinidad Crisis II
Crime and violence, corruption and ethnic tensions have all played a role in increasing political risk as perceived by investors
Investment now considerably below historical levels
Murders, shootings, robberies and kidnapping have begun to spike – starting to hurt tourism
WEF ranks Trinidad 132 out of 138 countries in terms of business costs of crime and violence – reliability of police ranks 126th
Muslim group attempted a coup in the 1980s
Now fear with youth unemployment at 19% another may be in the offering – Trinidad ranks 14th per capita as a source for foreign fighters in Syria and Iraq

5. Assessment
Situation not hopeless, but will be critical how government responds – ad hoc approach or targeting one or two areas likely to fail.
Can’t just wait for oil prices to return – may take several years and prices unlikely to rise to pre 2014 crash levels any time soon.