A severe downturn in the economy and increasingly high levels of crime will plague Trinidad and Tobago for the next two years, with citizens remaining powerless to remove an unpopular Government due to an Opposition in disarray.

This is the summary of the April 2009 country report on Trinidad and Tobago, done by the UK-based Economist Intelligence Unit, a member of the Economist Group.

Published last week, the EIU report, which assesses the economic policy outlook, as well as political and international developments in T&T for 2009-2010, is an annual publication which tracks global business developments, economic and political trends, government regulations and corporate practices worldwide. The report on T&T is available on the website of The Economist Group.

The unit says it arrived at its conclusions through its digital portfolio where the latest analysis is updated daily; printed subscription products, ranging from newsletters to annual reference works; research reports and by organising seminars and presentations.

In its latest report, the EIU says the ruling People’s National Movement will be faced with more challenges for the period 2009-2010 ’as deterioration of the fiscal and current-account balances leaves Trinidad and Tobago exposed to global financial and economic woes’.

The report adds: ’GDP growth, which slowed to 3.5 per cent in 2008, will weaken further in 2009 to 0.9 per cent as the global recession bites. A mild global economic recovery will help to lift GDP growth to 1.9 per cent in 2010.’ And that ’with lower global energy prices and falling US demand, the government will be forced to scale back its ambitious public-investment 2020 development programme.’

Noting Government plans to continue its programmes of large-scale infrastructural works and developing the energy sector ’despite falling energy prices and tight financing conditions in 2009’, the EIU warns that this will be unsustainable in the long term, and that measures taken by Government so far to cut back on expenditure are simply not enough, given that ’as global liquidity has dried up, this will be a difficult task, and projected FDI (foreign direct investment) is unlikely to materialise.’

’Although the Government revised its budget projections for a second time in January, we believe that its energy price assumptions are still too high; as a result, its planned spending reductions will be insufficient to balance the budget. ’Additionally, downstream energy investment, which supported revenue growth in 2008, will face rising uncertainties as investors find it more challenging to secure project financing,’ the EIU says.

The EIU warns, too, that the Central Bank, whose governor, Ewart Williams, recently gave a gloomy, economic outlook for the country, will have some trying times in managing this new fiscal downturn.

’The Central Bank may need to turn its attention to deteriorating credit portfolios in the domestic banking system. After posting relatively large surpluses over the past six years, the fiscal accounts will move into deficit in the outlook period as energy revenue is hit by lower global, energy prices, which will be only partly compensated for by recently-announced cuts to budgeted spending plans.

’In 2008/09 the central government will post a deficit of 1.6 per cent of GDP,’ the unit predicted.

The report notes, however, that the Stabilisation Fund will keep T&T ’insulated’ against a prolonged downturn in energy prices.

This economic downturn will not be good news for the Patrick Manning administration, nor the country, in terms of the crime situation.

’The Economist Intelligence Unit expects the rate of violent crime to remain high during the forecast period, reinforcing public frustrations with the Manning administration,’ the report states, adding:

’Policy-making will become more challenging in 2009-10 as a deterioration of the fiscal and external account balances leaves Trinidad and Tobago exposed to global financial and economic woes. With economic growth slowing sharply in 2009, the already-low popularity of the People’s National Movement (PNM) Government, led by the prime minister, Patrick Manning, will suffer.

’According to recent polls, a majority of the population perceived little improvement to its living standards during the recent economic boom years, regards much public spending as wasteful and is concerned about corruption.

’The Government has also been ineffective in dealing with spiralling, violent crime.’ The report points out though that because of the ongoing ’disarray’ in the Opposition UNC (United National Congress), the ’Manning’s mandate’ will not be threatened.