Market Conditions Update – December 2015
After four consecutive quarters of decline in real GDP, the Central Bank has formally announced that Trinidad & Tobago is in a recession. Furthermore, according to the Governor, the country is facing “austere economic circumstances” and he predicts that there will be decreases in business investments, construction, consumer spending and loans, and that real GDP will contract by 1.5% in 2016. To make matters worse, the current low energy prices and decreasing energy production are both expected to continue for some time.
In the real estate market, mortgage interest rates are increasing brought on in part by the “Repo” rate being increased for the 8th consecutive time to 4¾% and the Mortgage Market Reference Rate increased to 2¾%. With all of this, the short-term outlook for the real estate market is foreboding.
However, the market has shown its resilience in past recessions the most recent being in 2009. Indeed, Mr Winston Dookeran, past Governor of the Central Bank, has stated “There is no need to be alarmist, but we must be vigilant about taking long- and short-term measures to prevent it from escalating.” It would therefore appear that the future direction of the local economy will be determined by the speed and efficiency with which the newly-elected government of Trinidad & Tobago addresses these challenges. Only time will tell how long the current recession will last, what effect it will have on real estate prices and to what extent the market will be able to recover when it is over.
For ease of reference, please see the graphical summary of the recent performance of some of the main Macroeconomic Indicators below.