Trinidad and Tobago has a very sophisticated economy for a country of its size, embracing mineral extraction, agriculture, industry, tourism and services, but it is underpinned by a single commodity – oil – which was first discovered in 1866. The high price of oil in the 1970s allowed considerable publicly financed development, but when the price fell in the 1980s the economy faltered badly. In the recession years (1985–89), GDP fell by 30 per cent in real terms. Although the government had substantial reserves, these were exhausted by 1987, and the economy had to be supported by the IMF until 1993, when oil prices had recovered.
In the late 1980s, a programme of privatisation was under way and continued through the 1990s. At the same time industries based on natural gas, tourism and other service industries were developed. Tax receipts have been rising through more efficient collection, though many tax rates have been cut.
With the new industries on stream and oil prices strong, the economy was buoyant in the latter 1990s into the 2000s, pausing briefly only in 2001–02, a period of political uncertainty, when the government was distracted from the structural reforms and investor confidence diminished.
Then during 2002–06 the economy grew at ten per cent p.a., moderating to 4.8 per cent in 2007. In the global economic downturn of 2008–09 demand for Trinidad and Tobago’s manufactures weakened sharply and the economy shrank by 4.4 per cent in 2009; it stood still in 2010, contracted by a further 1.6 per cent in 2011 and recovered modestly in 2012–15. Unemployment, which had fallen to an all-time low of 4.6 per cent in 2008, rose rapidly in 2009–12.
There are more than 30 producing oil and gas fields, many of them offshore. For a long time after the 1970s there were no significant fields discovered, but exploration in areas off the east coast led to discovery of the large Angostura field in 2001. In January 2014 oil reserves were estimated at 800 million barrels. Exploration has intensified following the Angostura find, but offshore fields are costly to exploit and slow to be brought on stream. There are two oil refineries: at Pointe-à-Pierre and at Point Fortin.
Trinidad and Tobago has estimated proven natural gas reserves of 400 billion cubic metres (January 2014). The Atlantic LNG Plant at Point Fortin started to export natural gas in 1999. It was then expanded in stages during the 2000s. The country is among the world’s biggest exporters of LNG.
Manufacturing and process industries are centred on the free-trade zone. The government established joint ventures with foreign companies to produce iron and steel, petrochemicals, cement, ammonia and other nitrogenous fertilisers, urea and methanol. A plan for construction of a large aluminium smelter prepared by US-based Alcoa was rejected following a challenge by environmentalists. New plans for construction of an aluminium smelter funded by China were announced in 2008 but then cancelled in 2010.
Trinidad and Tobago’s natural gas has a high methane content with few impurities and is very suitable for methanol and ammonia production. The Point Lisas industrial estate has seven large, modern methanol plants, nine ammonia plants and a urea plant, with more under development, and the country is among the world’s largest exporters of both methanol and ammonia.
It also assembles motor vehicles and produces consumer durables, such as television sets and gas cookers, and clothing, and there is a significant printing industry.