Full Breakdown
Economic Uncertainty in Trinidad and Tobago Amid US-Venezuela Tensions
1/2/2026, 11:42:20 AM
Geopolitical Context and Economic Impact
The Central Bank of Trinidad and Tobago (TT) has reported that ongoing tensions between the United States and Venezuela are contributing to economic uncertainty in the country. This assessment was included in the bank's final monetary policy report for 2025, released on December 31, 2025. The tensions escalated in August 2025 with the deployment of US Navy vessels, including the aircraft carrier USS Gerald R. Ford, to the southern Caribbean as part of a military buildup aimed at countering narco-terrorism and trafficking from Venezuela. The US military presence has been supported by Prime Minister Kamla Persad-Bissessar, who has publicly endorsed the deployment and condemned local critics.
The Central Bank noted that these geopolitical developments have created a "tentative" economic growth environment in TT. While higher energy production is anticipated due to new natural gas fields, the non-energy sector is reportedly losing momentum, which could hinder overall economic recovery.
Economic Indicators and Projections
The International Monetary Fund (IMF) projected a global output growth of 3.2% for 2025, slightly down from 3.3% in 2024. In contrast, TT's economic outlook has been affected by declining foreign reserves, prompting international ratings agencies like Moody's and Standard and Poor's to revise the country's economic outlook from stable to negative. As of mid-December 2025, TT's foreign reserves stood at approximately $5.3 billion, up from $4.6 billion in October, but still warranting close monitoring.
Crude oil prices have also been a concern, with West Texas Intermediate (WTI) crude averaging $59.57 per barrel in November 2025 and remaining below $60 per barrel in December. The budget for 2025/2026 was based on higher projected prices of $73.25 per barrel for crude oil and $4.25 per million British thermal units (mmbtu) for natural gas, which may not align with current market conditions.
Criticism and Opposition
Despite the government's support for US military actions, there are dissenting voices regarding the implications of foreign military presence in TT. Critics argue that reliance on the US for security may undermine the country's sovereignty and raise concerns about the long-term economic impacts of such military engagements.
Official Statements and Responses
The Central Bank emphasized the need for caution in balancing the protection of foreign reserves with the creation of conditions conducive to sustainable economic growth. It highlighted that wage adjustments and aggregate demand could significantly influence this balance, particularly with a promised 10% wage increase for public servants by the United National Congress (UNC) following their recent electoral victory.
Conflicting Reports and Gaps
There are discrepancies regarding the effectiveness of the US military's operations against drug trafficking, with reports indicating at least 107 fatalities in strikes against alleged drug vessels since September 2025. However, the long-term economic implications of these military actions remain unclear, as the Central Bank warns of the potential for a slowdown in non-energy sector activity, particularly in distribution, construction, and manufacturing.
Verbatim Quotes
“Domestically, the fluid geopolitical tension between the US and neighbouring Venezuela is contributing to building economic uncertainty.” — Central Bank of Trinidad and Tobago
“Against this backdrop, given TT’s high propensity to import, safeguarding the country’s international reserves becomes paramount.” — Central Bank of Trinidad and Tobago
“economic growth is somewhat tentative.” — Central Bank of Trinidad and Tobago
