The Central Bank has said that uneven distribution of covid19 vaccine distribution can pose a serious threat to emerging markets and the economic recovery of developing countries.
In his May 2021 monetary policy report, he said the International Monetary Fund (IMF) had forecast a global expansion of 6% for this year, after a 3.3% contraction in 2020, but threats of further development. virus variants, diverse fiscal support, and varied access to vaccines could imply uneven recovery paths.
“In the Caribbean, most countries have experienced a sharp decline in economic activity alongside rising unemployment and business closures amid the ongoing pandemic.
“Commodity producers are expected to benefit from rising energy prices, but moderate growth is expected for tourism dependent economies, given continued weakness in demand for travel and tourism services. ”
He added that headline inflation is expected to remain contained in the short to medium term, but that depends on the pace of the global recovery from the covid19 pandemic.
Vaccination programs and the gradual easing of movement restrictions are expected to support a significant recovery in global growth in the second half of 2021 and through 2022, the Central Bank said.
The bank’s report comes as mass vaccinations ramp up in Trinidad and Tobago after the country received 800,000 Sinopharm vaccines on Wednesday. The economy is also gradually reopening, with the food sector joining the construction and manufacturing sectors from Monday.
The bank has also forecast energy prices to rise, with oil averaging US $ 70 a barrel and natural gas US $ 3 Mbtu in recent weeks.
“The prices of energy commodities are expected to improve in the short to medium term, driven by rising global demand. Local energy production is expected to be supported by rising commodity prices and increased demand for energy-related products as some economies gradually reopen, ”the bank said.
“The extent of local covid19 containment measures alongside the planned acceleration of vaccinations will affect how quickly domestic production picks up in the second half of this year.”
The central bank also said that core inflation is expected to remain low and stable due to weak upward pressure on demand due to persistent limitations in economic activity and ample available generation capacity.
“Headline inflation averaged 0.9% from October 2020 to April 2021. On an annual basis until April 2021, core inflation and headline inflation reached 1.1%. Food inflation slowed over the period, from 4.4% in October 2020 to 1.5% in April 2021.
“Despite an acceleration in international food prices, domestic food price inflation averaged 3.3% over the period, slowing to 1.5% in April 2021 from 4.4% in October 2020.”
The Central Bank added that the repo rate would be kept at 3.5 percent, while continuing to monitor and analyze international and domestic developments and outlook. The report was released after the previous reverse repo rate monetary announcement in June.