Wednesday 28th September, 2005

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Mr. Speaker, following an unusually rapid pace in 2004, the rate of growth of global output slowed to about 4 percent in 2005 although remaining above long-term potential. As a result of rising oil and commodity prices and less expansionary macroeconomic policies, global economic growth is expected to slow further to around 3 to 3.5 percent in 2006.

Mr. Speaker, Trinidad and Tobago's economic prospects for the next few years are particularly encouraging. We do not expect oil prices to fall below US$45-$50 per barrel over the medium term and also expect natural gas and petrochemical prices to remain buoyant. With BHP Billiton's operations moving towards capacity, oil production is expected to reach 165,000 barrels per day by 2006/2007, reversing the trend of the past several years. In terms of natural gas, the start-up of Train IV will increase total gas utilization for LNG production and almost double output from the LNG facility to 15.1 metric tones per annum (mtpa). This increase will position Trinidad and Tobago as one of the leaders in LNG production in the world. Output in the petro-chemical sector is also expected to expand sharply with the expected commissioning of at least five (5) new plants in the petrochemical sector.

In the non-energy sector, construction activity will remain at a very high level as a result of our housing thrust, our infrastructure works programme, and ongoing work on several large public sector construction projects, while our tourism sector will continue to post significant gains. With the aid of measures included in this Budget, we envisage increased activity in manufacturing and the start of a turnaround in agriculture.

Real GDP growth is projected to increase from 6.5 percent in 2005 to around 8 percent in 2006 with the unemployment rate declining to below 7 percent and inflation contained to around 5 percent.

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