The year 2025 marked a period of significant economic recalibration for Trinidad and Tobago as the nation confronted multiple structural challenges within an increasingly volatile global landscape. Trade policy fluctuations and geopolitical tensions created headwinds for the Caribbean economy, exposing its continued reliance on the energy sector while highlighting urgent needs for diversification and reform.
Global economic conditions deteriorated throughout 2025, particularly following April tariff actions by the United States that targeted several trading partners including China and Canada. Although subsequent negotiations resulted in partial rollbacks and delayed implementation timelines, persistent uncertainty undermined international trade stability.
Domestically, the Trinidad and Tobago economy contracted by 2.1% during the first quarter of 2025, with both energy (-4.8%) and non-energy (-1.0%) sectors contributing to this decline. The economic downturn reflected deeper structural issues, including declining natural gas production and a severely constrained foreign exchange market that affected businesses across virtually all sectors.
Geopolitical tensions with Venezuela emerged as a critical concern, with Caracas suspending key energy cooperation agreements including the strategically important Dragon gas project. This suspension jeopardized Trinidad’s access to Venezuela’s substantial offshore gas reserves, potentially undermining future gas supply security for the nation’s LNG and energy industries while damaging investor confidence in the sector.
The foreign exchange shortage persisted throughout 2025, creating operational challenges for businesses through unpredictable currency access, delayed supplier payments, rising input costs, and production disruptions. The administratively managed system continued to reduce competitiveness and discourage new investment, demonstrating that rationed rather than market-responsive forex access inhibits efficient economic growth.
Business confidence metrics revealed a complex picture. The TT Chamber of Industry and Commerce’s Business Outlook Index for Q4 2025 indicated that 54% of executives reported worsened financial performance over the previous six months. However, a majority anticipated improved organizational financial outlook within twelve months, suggesting business leaders viewed current challenges as cyclical rather than permanent. Notably, the Accommodation and Food Services sector demonstrated particular sensitivity to fiscal policy changes, with hiring intentions dropping sharply following excise duty increases on alcohol and tobacco in the 2026 Budget.
International ratings agencies expressed growing concern about the nation’s economic trajectory. S&P Global Ratings revised Trinidad and Tobago’s outlook to negative on September 25, 2025, citing gradual erosion of fiscal and external buffers alongside subdued long-term economic growth. Moody’s maintained the government’s Ba2 rating but similarly revised the outlook to negative on December 12, 2025, highlighting near-term risks including declining foreign exchange reserves.
Operational challenges persisted across the business environment, with issues in trade facilitation, port operations, and administrative processing affecting transaction costs and delivery timelines. Tax administration delays, particularly regarding VAT refunds, created cash flow management difficulties for exporters and VAT-intensive businesses.
The labor market reflected both resilience and structural problems, with job demand continuing to outpace available opportunities—particularly for youth and first-time labor force entrants. A National Recruitment Drive in October 2025 attracted approximately 11,000 online applications on its first day, demonstrating substantial unmet employment demand. Simultaneously, employers reported persistent skills mismatches and difficulties sourcing appropriately trained labor for specialized roles.
The potential prolonged shutdown of Nutrien’s nitrogen operations at Point Lisas Industrial Estate exemplified the economic consequences of structural challenges. The fertilizer producer cited port access restrictions and unreliable, uneconomic natural gas supply as primary reasons for the closure, which threatens significant foreign exchange earnings from ammonia and urea exports, risks hundreds of jobs, affects related industries, and could undermine investor confidence in the petrochemical sector.
These developments throughout 2025 underscored the urgent need for decisive economic reform in Trinidad and Tobago. The convergence of global uncertainty, energy sector vulnerabilities, foreign exchange constraints, and business confidence challenges revealed the limitations of the current economic model and emphasized the risks of continued energy sector reliance. The path forward requires prioritizing private sector-led expansion, productivity enhancement, and long-term competitiveness to achieve inclusive and durable economic progress.
