Windfalls and resilience

Last week, the UN Economic Commission for Latin America and the Caribbean (ECLAC) issued its 2026 International Trade Outlook for Latin America and the Caribbean.

I believe its contents merit inclusion in ongoing formal and informal discussions and debates on the merits and demerits of the 2027 national budget statement and the specific measures to meet its goals and targets.

ECLAC reminds us of the potentially disruptive impacts of continued geopolitical conflict, disrupted shipping routes, rising freight and insurance costs, and increasingly unpredictable trade policies.

These factors, the reports suggests, can raise import costs and thereby weaken the competitiveness of exporters.

Diplomatically, ECLAC stops short of spelling out what should be obvious: sycophantic compliance with the indulgences of powerful geopolitical actors offers no insulation against the worst effects of global turmoil. Perhaps it goes without saying. But we should start saying it out loud. It is a massive elephant in the room.

Although the overall regional trade outlook is largely positive, T&T’s export prospects are considerably more modest. Mexico’s resilient export sector, among the world’s 10 largest, and Guyana’s phenomenal oil-driven progress must also be considered when assessing the overall regional picture.

ECLAC's 2026 Report

Yes, the forecast for T&T points to a 2% expansion in exports as opposed to contraction, but this country is expected to lag behind the others expecting an increase in total export value of up to 20%. Again, factor in the main anomalies.

Much of this increase reflects both higher prices and expanding volumes. The T&T Manufacturers Association (TTMA) has encouragingly noted that for the first half of this year, there was an 11.6% expansion in non-energy manufacturing exports.

Regional services exports are meanwhile forecast to grow by 11%, with transport and travel leading the way.

Our central economic thrust appears to be taking advantage of improved purchasing power from favourable hydrocarbon prices, increased production after a 45% contraction over the past 12 years, and longer-term opportunities in services. But there is a cautionary note here: the projected natural gas price of US$5 per million British thermal units (MMBtu) deserves critical scrutiny.

But both natural gas prices and production are heavily reliant on numerous factors outside our direct control. Expanded benefits from the services sector in turn rely heavily on foreign direct investment, rigorous programmes of skills development, and coordinated public policy that gets priorities right.

ECLAC identifies T&T among the economies expected to record improvements, largely because of higher hydrocarbon and commodity prices. This can bring improved purchasing power, and a greater capacity to finance imports with export earnings. But this may at the same time diminish enthusiasm for domestic production of consumables.

Correspondingly, if the forecasts for higher energy prices hold, our Caricom neighbours will face threats to their net trade gains. Such a challenge will not easily disappear from our neighbourhood fence.

The ECLAC report argues that T&T should employ gains from favourable energy prices and enhanced production to expand opportunities in new and existing areas.

I believe there is a very strong case for harnessing the creative sector but there are other important possibilities, as identified by ECLAC. These include business, professional, financial, information technology, and research and development services. There are people also making the case for both traditional and medical tourism.

Additionally, external delivery of digital services is an area due for far more competent exploitation.

Manual backends with digital facades are not what is meant by modern deployment of digital services. Neither the state nor private sectors seem to understand this.

ECLAC has nevertheless noted such potential in T&T with emphasis on engineering, software, and design and data management. There are people here who know about such things. They should be found and put to work.

Significantly, ECLAC puts several risks on the table for consideration. The first is energy-price volatility and chronic fiscal dependence on the sector. The second is that even if price volatility works to our benefit, weak production can limit revenue gains. Then there is the question of foreign-exchange shortages that can constrain attempts at diversification.

Finally, there is no guarantee that current global conflicts will not alleviate the chance of shipping disruptions and trade fragmentation.

These are some important reality checks that should dominate the public discourse.

Yes, it is important to consider the revenue gains from energy production and prices. The true test would be derived from an ability to employ such earnings to build an economy better equipped to withstand the downturns. That’s the test of a successful budget.