Economic recovery begins in T&T
The Central Bank of Trinidad and Tobago (CBTT) said business operations are starting to recover following the gradual opening of the economy since the third quarter of 2021.
In its Monetary Policy statement, the CBTT said that with respect to financing, business credit rose by 1.3 per cent year-on-year in October 2021, the first increase since August 2018.
Recent lending was particularly buoyant to the construction, finance and insurance sectors, alongside the 4.6 per cent rise in mortgage lending.
However, consumer lending contracted by 2.3 per cent, despite a slight decrease in interest rates, and the weighted average lending rate of commercial banks declined to 7.04 per cent in September 2021, 16 basis points lower than in March 2021, the CBTT said.
Nonetheless, it noted that financial system liquidity remained “ample”, with banks’ excess reserves at the central bank averaging TT$7.37 billion during the first half of December 2021.
Amid the cautious optimism for economic recovery, the central bank warned that there could be further increases in food and core inflation in 2022.
After a lag of several months, the bank said external price pressures are currently having a direct and broad-based bearing on domestic inflation. Headline inflation measured 3.9 per cent year-on-year in October 2021, compared with 2.4 per cent a month earlier.
The bank said food inflation surged to 7.6 per cent from 5.8 per cent in September last year and is likely to rise further given the situation in global grain markets. Core inflation, which excludes food items, almost doubled to 2.9 per cent from the previous month.
It added that stronger price pressures were also observed for building materials, with the Index of Building Material Prices rising by 12.6 per cent during the third quarter of 2021 when compared to the previous corresponding quarter.
Ultimately, the bank’s committee pointed out that the country’s economic outlook entering 2022 was clouded by significant uncertainty over the path the novel coronavirus pandemic will take going forward.
