PORT OF SPAIN – The Central Bank of Trinidad and Tobago (CBTT) says Indicators suggest a contraction in energy production in the second quarter of 2024, alongside buoyant non-energy output.
In its Monetary Policy Report for November, the CBTT said energy sector output incurred major declines, on account of shortfalls in upstream production. Meanwhile, activity in the non-energy sector remained resilient and inflation was contained.
It said while economic activity improved in the first quarter of 2024, there were ongoing production challenges in the energy sector.
Data from the Central Statistics Office (CSO) indicates that the gross domestic product (GDP) at constant prices (real GDP) improved 1.5 per cent in the first quarter of 2024.
Growth was premised on the continued strength of the non-energy sector at 1.8 per cent and further supported by a marginal expansion in the energy sector, 0.9 per cent.
Non-energy sector output was propelled by upticks in the manufacturing, excluding refining and petrochemicals, financial and insurance activities and transport and storage sectors.
The CBBT said that growth in the energy sector emanated from improvements in the manufacture of petrochemicals, condensate extraction and petroleum and natural gas distribution sectors, adding that these were partially offset by declines in the crude oil exploration and extraction, natural gas exploration and extraction, asphalt and refining sectors.
The Central Bank estimates suggest that there was a contraction in the energy sector in the second quarter of 2024. However, nonenergy sector- activity remained strong over the period registering 1.7 per cent, though insufficient to counter the declines in the energy sector of minus 7.9 per cent.
The CBTT said that waning energy sector output was premised on shortfalls in upstream production.
Data from the Ministry of Energy and Energy Industries (MEEI) pointed to reduced output of crude oil (-11.4 per cent) and natural gas (-9.8 per cent) in the second quarter of 2024. This largely reflected the planned maintenance programmes conducted by bpTT at several production facilities.
This prompted a falloff in mining and quarrying sector activity (-8.2 per cent).
The CBTT said that these upstream declines filtered through to the refining and petrochemicals sectors.
“In the case of the former, reduced production of liquefied natural gas (LNG) (-16.7 per cent) outweighed a sizable uptick in natural gas liquids (NGL) production (41.6 per cent). The large increase in NGL production was due to a base effect, as Pheonix Park Gas Processors Limited took its processing units offline in April 2023 for routine maintenance works.”
Meanwhile, production of petrochemicals was marred by declines in ammonia (-9.8 per cent) and methanol (-6.8 per cent) output. Over the period, urea production improved marginally (1.0 per cent).
The CBTT said that preliminary data for energy sector output over the period July to August 2024 suggests a partial improvement from the second quarter’s performance.
According to data from MEEI, crude oil production declined by 3.1 per cent, while natural gas output increased by 2.8 per cent over the period. The production of liquefied natural gas (LNG) fell by 2.5 per cent, while natural gas liquids (NGL) grew by 12.8 per cent. In the downstream sector, improved output was observed for ammonia (18.7 per cent) and methonal (3.0 per cent), while the production of urea declined by 72.9 per cent.
The CBBT said that indicators suggest that the non-energy sector remained resilient in the second quarter of 2024.
“This sentiment was supported by an increase of 10.1 per cent (year-on-year) in the Cashless Payments Index in June 2024, a supplementary indicator of activity in the nonenergy sector. On a sectoral basis, increased activity was estimated in the Wholesale and Retail Trade (excluding Energy) sector (2.7 per cent), reflecting an improvement in the Index of Retail Sales.
“This reflected improvements in most sub-indices, specifically dry goods stores (3.6 per cent) and Supermarkets and Groceries (1.3 per cent). Improvements in the Index were offset by decreased sales in the Household Appliances, Furniture and other Furnishings (-1.1 per cent) and Textiles and Weaing Apparel (-0.3 per cent) sub-indices.
“The buoyancy of this sector was further supported by upticks in supplementary indicators, depicted by an increase in the volume of point of sale (18.0 per cent) and internet merchant (14.8 per cent) transactions.”
The CBTT said increased activity was also estimated for the transportation and storage sector (6.5 per cent), on account of greater land and air travel. It said an uptick in the local sales of cement suggests improved activity in the construction sector (3.7 per cent).
Over the period, improvements were also noted in the number of building permits issued and refused (26.2 per cent), hinting heightened construction-related activity in the near term. Improvements were also estimated in the manufacturing, excluding refining and petrochemicals sector (0.2 per cent).
Conversely, declines were estimated in several sectors in the second quarter of 2024. Notable among these was the electricity and water, excluding as (-0.7 per cent) sector, wherein improved power generation was offset by reduced water supply.
Further, indicators point to curtailed activity in the financial and insurance activities sector (-1.3 per cent). This reflected a falloff in gross premiums in the insurance industry, a reduction in the volume of shares traded on the stock exchange and a decline in deposits and investments of trust institutions, the CBTT noted.
The Central Bank said the labour market conditions tightened somewhat in the second quarter of 2024, resulting in an unemployment rate of 4.8 per cent compared to 3.7 per cent recorded in the same quarter of 2023.
It said the higher unemployment rate reflected a year-on-year decline in the number of persons employed (26.7 thousand) and an increase in the number of unemployed persons (5.9 thousand).
“Simultaneously, the labour force contracted by 20.8 thousand persons, resulting in a labour force participation rate of 54.5 per cent, down from 56.2 per cent in the corresponding quarter one year earlier. National insurance scheme (NIS) payments also declined by 5.6 per cent (year-on-year) in the second quarter of 2024, suggesting generally weaker employment during the period.”
Meanwhile, preliminary data on the number of job advertisements published in the print media (608) increased by 16.3 per cent (year-on-year) during the third quarter of 2024.
The CBTT said that total imports rose by US$107.7 million to US$1,774.3 million in the second quarter of 2024.
Over the three months to June 2024, fuel imports increased by 36.5 per cent (year-on-year), or US$111.0 million, to reach US$414.9 million.
“This movement was primarily driven by an increase in import volumes of refined products for export to regional markets, which more than doubled (152.4 per cent) over the reference period. Concurrently, non-fuel imports recorded a marginal decline, falling by 0.2 per cent or US$ 3.3 million to US$1,359.4 million.”
The CBTT said total exports posted a marginal decline in the second quarter of 2024.
It said exports registered US$2,334.6 million in the second quarter of 2024 compared to US$2,494.2 million in the same period of 2023.
“The lower outturn in total exports was driven mainly by a reduction in energy exports. More specifically, energy exports fell by 7.4 per cent (year-on-year) to US$ 1,867.7 million in the second quarter of 2024.
“Declines were noted for most subcategories of energy exports including; gas (-34.9 per cent) and petrochemicals (-2.2 per cent). Softer international commodity prices coupled with lower export volumes for some products during the period were responsible for the weaker performance. (CMC)
