Trinidad & Tobago

Sustained growth in 2025, but bleak energy future

Economic activity has gained momentum in 2025. The improvements observed in the energy sector (30% of GDP) at the end of 2024 have continued, driven by the start of production at the Cypre (operated by BP) and Mento (EOG) offshore gas projects in April and May 2025, respectively. In the non-energy sectors, manufacturing (6% of GDP), financial services (6%) and tourism (7.5%) are benefiting from solid demand.

Private consumption will remain strong, supported by low inflation and the expected 10% increase in public sector wages. Credit expansion (+8.8% year-on-year in March 2025) and labour market stabilisation, following a slight rise in unemployment in 2024 (5.5% in Q4 2024 vs. 4.1% in Q4 2023), are also supporting domestic demand. Furthermore, investment remains buoyed by the development of gas projects and port operations in the capital. However, on the external front, Trinidad and Tobago is facing new US tariff barriers. While energy exports (34% of the total, 54% of which go to the US) are exempt from duties and boosted by ongoing gas projects (43% increase in LNG exports between April and May 2025), exports of petrochemicals (16% of the total), steel and aluminum (7.5%) are likely to bear the brunt of these measures.

However, the outlook for the energy sector in 2026 is darkening. On 17 April 2025, the Trump administration announced the revocation of OFAC licenses authorising the development of cross-border gas fields with Venezuela and gave oil companies until the end of May 2025 to halt operations. While the Manakin-Cocuina project, which was not expected to start production until 2029, represented a longer-term growth driver, it is above all the stoppage of the Dragon megaproject that is disrupting the country's energy outlook. This field, operated by Shell, contains 4 trillion cubic feet of reserves and was due to come on stream in 2026 for conversion to LNG from 2027. It was intended to offset the decline in domestic fields and enable the country to maintain its position as the region's leading exporter of LNG, ammonia, and methanol. Its suspension is therefore blocking Venezuelan pipelined gas imports, disrupting its processing and resale in the form of LNG or petrochemical products.

New government reviews mid-year budget

The budget deficit is expected to widen for the 2024-25 fiscal year. On taking office in April 2025, the incoming government had to address a worsening budgetary situation, which Finance Minister Davendranath Tancoo attributed to mismanagement by the former administration, led by the People's National Movement (MNP). He claimed that the latter underbudgeted certain essential expenditures, particularly in education. In this context, a budget increase (+5% compared to the initial budget) of TT$3.1 billion was approved by Parliament in June 2025, mainly for current expenditures (TT$2.9 billion) and for development projects (TT$279 million). This is on top of the initial budget of nearly TT$60 billion (approximately USD 9 billion), which was based on a deficit of 2.9% of GDP according to the previous government's estimates. In addition, the downward revision of its oil price assumptions (from USD 77.8 to USD 66 per barrel) and volatility in the local price of LNG, which is indexed to the US Henry Hub benchmark index (from $3.59 to $5/MMBtu), are affecting energy revenues (25% of total revenues), prompting the new executive government to anticipate a budget deficit twice the size of the initial forecast. The widening deficit accentuates the public debt’s upward trajectory, with the external share representing 32% of the total in April 2025. The deficit is expected to be financed through local borrowing and recourse to multilateral facilities (CAF, IDB, IFC). The government has also announced plans to rationalise certain expenditures, such as private security contracts and official housing. On the revenue side, in May 2025, it repealed the 2021 law establishing the Trinidad and Tobago Revenue Authority (TTRA), an independent tax authority intended to improve tax collection and bring in $1.5 billion to $3 billion. The decision was motivated by election promises to public sector unions. The government has promised to strengthen the current Board of Inland Revenue (BIR), but the lack of immediate measures threatens the stability of revenues, which is already weakened by dependence on hydrocarbons.

The current surplus has continued to decline in 2025. New US protectionist measures (the US is the largest customer, accounting for 41% of total exports) are slowing exports of petrochemical products (25% is destined for the US in 2024), particularly ammonia and methanol, while hydrocarbon exports are benefiting from the start of production at the Cypre and Mento fields. However, energy revenues are being eroded by the fall in hydrocarbon prices. The services deficit is narrowing as the tourism sector continues to recover. The primary income account remains in deficit due to repatriated income from the many foreign oil companies operating in the country. Supported by the sovereign wealth fund (Heritage and Stabilization Fund), international reserves remain at an adequate level. These stood at USD 5.6 billion at the end of 2024, i.e., the equivalent of eight months of imports. Last, the outlook for 2026 points to a continued current account surplus on back of the stoppage of the Dragon and Manakin-Cocuina megaprojects, which is penalising LNG and petrochemical exports.

UNC wins snap parliamentary elections

The political landscape in Trinidad and Tobago was shaken by the snap parliamentary elections held on 28 April 2025 following the January 2025 resignation of former Prime Minister Keith Rowley. The election marked the triumphant return of Kamla Persad-Bissessar and her United National Congress (UNC, centre-left), which won 54.2% of the vote and 26 of the 41 seats in the House of Representatives, effectively ending a ten-year rule by the People's National Movement (PNM, centre-left). The Tobago People's Party (TPP), which supports the UNC, won both seats in Tobago (a semi-autonomous island) at the expense of the PNM. Voting continues to trend along ethnic lines, with Afro-Trinidadians traditionally voting for the PNM and Indo-Trinidadians for the UNC, with mixed-race and other groups determining the outcome. The parties’ victory can be explained by a particularly tense pre-election backdrop. The outgoing government, which was already weakened by the handover of power between Keith Rowley and his Energy Minister Stuart Young in March 2024 2025, was hit hard by the political consequences of the revocation of US licenses for cross-border gas projects in early April 2025. This decision, perceived as a diplomatic failure, served as a powerful electoral lever for the opposition. Furthermore, the inability to curb crime, despite the state of emergency declared at the end of December 2024 and extended three times, eroded the PNM's credibility. With 625 homicides reported in 2024 (45.7 per 100,000 inhabitants) – a historic high – national security has become the main concern of voters. The new Persad-Bissessar administration thus faces a threefold challenge. The first is to deliver on its promises to fight organised crime in a context of limited resources and porous borders with Venezuela. In addition, it will have to implement public sector wage increases while putting the already pressured public finances back on track. Third, the new administration will have to navigate between US demands and national economic needs.

As such, the Persad-Bissessar administration should reassure Washington about its cooperation on regional security, particularly against Venezuelan criminal networks. On the other hand, it needs to maintain economic relations with Caracas to compensate for the decline in national gas reserves and preserve the petrochemical industry. Although the former prime minister appealed the US decision on OFAC licenses, the Trump administration's uncompromising stance leaves little room for negotiation. Last, the country will maintain its economic relations with China, particularly under its New Silk Road initiative.

Last updated:June 2025