Identifier
Created
Classification
Origin
06PORTOFSPAIN590
2006-05-11 15:10:00
UNCLASSIFIED
Embassy Port Of Spain
Cable title:
TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 1
how-toVZCZCXRO1607 PP RUEHGR DE RUEHSP #0590/01 1311510 ZNR UUUUU ZZH P 111510Z MAY 06 FM AMEMBASSY PORT OF SPAIN TO RUEHC/SECSTATE WASHDC PRIORITY 6840 INFO RUCNCOM/EC CARICOM COLLECTIVE RUEHCV/AMEMBASSY CARACAS 3590 RUEHKO/AMEMBASSY TOKYO 0074 RUEHHM/AMCONSUL HO CHI MINH CITY 0017
UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000590
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: EIND EAIR EFIN TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 1
PORT OF SP 00000590 001.2 OF 002
The following were notable economic issues in T&T
during late April/early May:
(1) Inflation continues with little change
(2) BWIA job cuts coming
(3) T&T Business confidence weakens
(4) A thousand Chinese to build aluminum smelter
------------------------------------------
UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000590
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: EIND EAIR EFIN TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 1
PORT OF SP 00000590 001.2 OF 002
The following were notable economic issues in T&T
during late April/early May:
(1) Inflation continues with little change
(2) BWIA job cuts coming
(3) T&T Business confidence weakens
(4) A thousand Chinese to build aluminum smelter
--------------
1. Inflation continues with little change
--------------
The inflation rate in T&T was running at an annual rate
in March of 6.6 percent, according to T&T Central Bank
figures. While this was only slightly higher than 6.5
percent in February, there is still no sign of it
falling to the Bank's target range of 4-5 percent. In
the absence of clear signs of any substantial easing in
inflation, the Bank stated in April that monetary
policy needed to remain tight to address inflation
pressures. It said in the coming weeks it would
discuss with commercial banks further measures to
absorb liquidity and dampen consumer credit. Food
prices, particularly fruits, vegetables and fish,
continue to be the main drivers of inflation, currently
running at an annualized rate of 19.3 percent.
COMMENT: With the announcement May 10 that the U.S.
Federal Reserve raised the fed funds rate to 5 percent,
post anticipates that the T&T Central Bank will raise
the repo rate later this month. End comment.
--------------
2. BWIA job cuts coming
--------------
Further job cuts at state-owned airline BWIA are
included in a new business plan, according to Curtis
John, president of the Aviation, Communication and
Allied Workers Union. BWIA is in the middle of a major
restructuring exercise to transform it into a regional
carrier. According to John, new BWIA CEO Peter Davies
was clear that there would be job cuts. These cuts are
expected to take place over a period of two years and
would commence after completion of the restructuring
exercise. Minister Lenny Saith has been reviewing the
plan since April 14 as chairman of the Cabinet
subcommittee on BWIA, but has yet to advise if it meets
with government approval. The government has promised
yet another infusion of US$250 million to the airline
once it has completed its restructuring plan.
--------------
3. T&T Business confidence weakens
--------------
According to the Corporate Confidence Index (CCI) of
the Arthur Lok Jack Graduate School of Business at the
University of the West Indies, business confidence in
the T&T economy weakened in the first quarter of 2006.
The report cited as major factors for this decline high
interest rates, lack of available funding and a
shortage of skilled labor. The report stated that the
greatest contraction in confidence came from a
reduction in the investment outlook. Business
confidence declined from 44 to 10 points (on the CCI
scale) over a six-month horizon and from 56 to 24
points for the 12-month horizon.
--------------
4. A thousand Chinese to build aluminum smelter
--------------
Alutrint Ltd., a 60-40 partnership between state-owned
National Energy Corporation (NEC) and Sural Group of
Venezuela, announced that 1,000 Chinese workers would
be hired to help build its aluminum smelter in
southwestern Trinidad, and train locals to run it.
According to an official of Alutrint, the smelter plant
will cost between US$500-700 million and would produce
155,000 metric tons of aluminum annually. China
National Machinery Equipment Import and Export
Corporation will supply the workers to build the
smelter and an industrial park, producing aluminum
products such as cables, rods and auto parts. Since
this is a new industry for Trinidad and Tobago, the
company (and implicitly the GOTT) believes that T&T
workers do not have the required skills to build and
operate such a plant. Construction is expected to take
more than two years, and may require 1,000 to 1,500
workers. Once operational, about 800 persons will be
employed full-time at the smelter and industrial park.
PORT OF SP 00000590 002.2 OF 002
Both Alutrint and Alcoa, which is developing plans for
its own US$1.5 billion smelter to be built in the
southwestern corner of Trinidad, are awaiting approval
from the T&T environmental regulator before commencing
construction.
AUSTIN
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: EIND EAIR EFIN TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 1
PORT OF SP 00000590 001.2 OF 002
The following were notable economic issues in T&T
during late April/early May:
(1) Inflation continues with little change
(2) BWIA job cuts coming
(3) T&T Business confidence weakens
(4) A thousand Chinese to build aluminum smelter
--------------
1. Inflation continues with little change
--------------
The inflation rate in T&T was running at an annual rate
in March of 6.6 percent, according to T&T Central Bank
figures. While this was only slightly higher than 6.5
percent in February, there is still no sign of it
falling to the Bank's target range of 4-5 percent. In
the absence of clear signs of any substantial easing in
inflation, the Bank stated in April that monetary
policy needed to remain tight to address inflation
pressures. It said in the coming weeks it would
discuss with commercial banks further measures to
absorb liquidity and dampen consumer credit. Food
prices, particularly fruits, vegetables and fish,
continue to be the main drivers of inflation, currently
running at an annualized rate of 19.3 percent.
COMMENT: With the announcement May 10 that the U.S.
Federal Reserve raised the fed funds rate to 5 percent,
post anticipates that the T&T Central Bank will raise
the repo rate later this month. End comment.
--------------
2. BWIA job cuts coming
--------------
Further job cuts at state-owned airline BWIA are
included in a new business plan, according to Curtis
John, president of the Aviation, Communication and
Allied Workers Union. BWIA is in the middle of a major
restructuring exercise to transform it into a regional
carrier. According to John, new BWIA CEO Peter Davies
was clear that there would be job cuts. These cuts are
expected to take place over a period of two years and
would commence after completion of the restructuring
exercise. Minister Lenny Saith has been reviewing the
plan since April 14 as chairman of the Cabinet
subcommittee on BWIA, but has yet to advise if it meets
with government approval. The government has promised
yet another infusion of US$250 million to the airline
once it has completed its restructuring plan.
--------------
3. T&T Business confidence weakens
--------------
According to the Corporate Confidence Index (CCI) of
the Arthur Lok Jack Graduate School of Business at the
University of the West Indies, business confidence in
the T&T economy weakened in the first quarter of 2006.
The report cited as major factors for this decline high
interest rates, lack of available funding and a
shortage of skilled labor. The report stated that the
greatest contraction in confidence came from a
reduction in the investment outlook. Business
confidence declined from 44 to 10 points (on the CCI
scale) over a six-month horizon and from 56 to 24
points for the 12-month horizon.
--------------
4. A thousand Chinese to build aluminum smelter
--------------
Alutrint Ltd., a 60-40 partnership between state-owned
National Energy Corporation (NEC) and Sural Group of
Venezuela, announced that 1,000 Chinese workers would
be hired to help build its aluminum smelter in
southwestern Trinidad, and train locals to run it.
According to an official of Alutrint, the smelter plant
will cost between US$500-700 million and would produce
155,000 metric tons of aluminum annually. China
National Machinery Equipment Import and Export
Corporation will supply the workers to build the
smelter and an industrial park, producing aluminum
products such as cables, rods and auto parts. Since
this is a new industry for Trinidad and Tobago, the
company (and implicitly the GOTT) believes that T&T
workers do not have the required skills to build and
operate such a plant. Construction is expected to take
more than two years, and may require 1,000 to 1,500
workers. Once operational, about 800 persons will be
employed full-time at the smelter and industrial park.
PORT OF SP 00000590 002.2 OF 002
Both Alutrint and Alcoa, which is developing plans for
its own US$1.5 billion smelter to be built in the
southwestern corner of Trinidad, are awaiting approval
from the T&T environmental regulator before commencing
construction.
AUSTIN