Global economic uncertainty persists as a combination of heightened geopolitical tensions and trade policy uncertainty is contributing to a slowdown in growth prospects for the world’s major economies. The IMF, in its July 2025 World Economic Outlook Update, projected an expansion in world output of 3.0 per cent in 2025, down from 3.3 per cent in 2024. The anticipated downshift in global demand is being reflected in the energy commodity markets. Crude oil prices (West Texas Intermediate) averaged US$64.08 per barrel (bbl) in August 2025 compared with US$75.55/bbl a year earlier. Natural gas prices (Japan Korea Market and National Balancing Point) have also come down from the levels recorded earlier in 2025.
Monetary Policy Announcement
The recent escalation of tensions in the Middle East has further added to global economic uncertainty. The susceptibility of oil supplies to potential disruption on account of the military action in that area resulted in a spike in crude oil prices. Brent crude oil prices reached a high of US$76 per barrel (bbl), but subsequently fell below US$70/bbl following the announcement of a ceasefire. Financial markets nonetheless remain on edge in a very fluid situation. Higher energy prices and a possible escalation of hostilities pose risks for growth and inflation across the world, although energy exporters could benefit from the terms of trade shock.
The current international economic setting is marked by significant policy uncertainty, amid the threat of tariff wars significantly impacting global trade and leading to a resurgence of inflation. According to the International Monetary Fund’s January 2025 World Economic Outlook Update, world growth for this year is projected to remain relatively steady at 3.3 per cent, but with large downside risks. The IMF’s forecast of global inflation at 4.2 per cent in 2025, compared with 5.7 per cent in 2024, also appears optimistic given present trade tensions.
Global economic growth remained stable in 2024 despite ongoing geopolitical conflicts in Eastern Europe and the Middle East. The International Monetary Fund in its October 2024 World Economic Outlook forecasts global activity to expand by 3.2 per cent in 2024, slightly lower than the 3.3 per cent registered in 2023.
Global economic growth and inflation were fairly steady during the third quarter of 2024. Demand continues to pick up at a steady pace from the depths of the COVID-19 pandemic, with little evidence of overheating to date. Inflationary pressures are generally dissipating from the highs in 2023, in the absence of widespread wage-price spirals.
The Monetary Policy Committee of the Central Bank of Trinidad and Tobago (MPC) held a special meeting on July 19, 2024. The MPC examined the recent decline in excess reserves of commercial banks—the deposits held by banks at the Central Bank in excess of the required reserve ratio of 14 per cent of prescribed liabilities. The daily average of excess reserves measured $2,766 million from July 1 to July 18, 2024 compared to $3,914 million in June 2024.
Global economic conditions remain relatively stable. According to the International Monetary Fund, world growth for 2024 is forecast at 3.2 percent, unchanged from the 2023 estimate. Most central banks have either held their policy rates stable or lowered their rates as inflation pressures have eased.
Central Bank maintains Repo Rate at 3.50 per cent. Global economic growth for 2024 is forecast at 3.1 percent, according to the International Monetary Fund, the same rate as estimated for 2023. Most central banks in advanced and emerging market economies have either held their policy rates stable or have lowered their rates in recent months in the context of inflationary developments.
Central Bank maintains repo rate at 3.50 per cent. With inflation easing faster than anticipated and prospects for a ‘soft landing’ gaining momentum across several advanced and emerging market economies, international macroeconomic conditions appear relatively less constrained towards the end of 2023.
Despite some signs of resilience earlier in the year, continued though slowing inflationary pressures, still relatively high interest rates and the impact of geopolitical tensions pose immediate constraints to global economic activity.