TRINIDAD and Tobago is benefiting from increased production in oil, gas and petrochemicals and from higher prices for them, but amid global uncertainties must not rely on any such windfall indefinitely, warned the Central Bank in its Monetary Policy Report May 2022, issued on Monday.
"In the very uncertain global setting care must be taken to not consider this 'windfall' as permanent, and to continue much needed structural reforms to strengthen TT's competitiveness, said the report in its key messages."
The bank reiterated the point in its overview and outlook.
"Much-needed structural reforms should also be accelerated to reduce bureaucracy and strengthen TT's dynamism and attractiveness in tourism, financial and other service markets."
The report's key messages cited positives for TT domestically, but amid negatives globally.
"The global economic recovery is likely to slow in 2022, owing to high food and energy prices on account of the Russian/Ukraine crisis and supply shortages stemming from the covid19 pandemic, which have added to inflationary pressures across many economies.
"Domestically, higher crude oil and petrochemical production spearheaded a return to positive growth in energy sector activity during the fourth quarter of 2021.
"The roll-back of covid19 restrictions boosted business operations in some non-energy sectors while inflation, though rising, remains relatively contained."
"Recent high international energy prices have boosted the public finances and external accounts, creating a welcome space for financing further adjustment to the lingering effects of the pandemic.
The report's overview said the global economy had begun 2022 in recovery mode, but alongside rising inflation.
The war in Ukraine had caused a surge in energy prices and commodity prices and impacted real incomes and consumption globally.
"The war has also resulted in renewed supply shortages, including for wheat, vegetable oils, certain metals, and electronic components."
The report blamed "tremendous volatility in capital markets" on the fact of global stock prices oscillating on news surrounding the war, worry over interest rates, and fear of recession owing to monetary over tightening.
"At the same time, rising covid19 inflections and associated lockdowns in China and elsewhere not only threaten to add to existing supply constraints but provide a sobering indication that the pandemic has not yet run its full course."
All this had a mixed effect locally.
"Domestically, signs of a fairly broad-based economic recovery became more evident during the fourth quarter of 2021."
This included an uptick in energy-sector activity/production in late 2021.
"In addition, the continued roll-back of restrictions on movement led to a gradual resumption in output in many non-energy sector businesses, including distribution, manufacturing and construction."
However, global supply-side factors were stimulating inflation.
"The surge in international prices for food staples such as sugar, wheat and veg
