VZCZCXRO1607
PP RUEHGR
DE RUEHSP #0590/01 1311510
ZNR UUUUU ZZH
P 111510Z MAY 06
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC PRIORITY 6840
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 3590
RUEHKO/AMEMBASSY TOKYO 0074
RUEHHM/AMCONSUL HO CHI MINH CITY 0017

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000590 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EIND EAIR EFIN TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - MAY PART 1 
 
 
PORT OF SP 00000590  001.2 OF 002 
 
 
The following were notable economic issues in T&T 
during late April/early May: 
 
(1) Inflation continues with little change 
(2) BWIA job cuts coming 
(3) T&T Business confidence weakens 
(4) A thousand Chinese to build aluminum smelter 
 
------------------------------------------ 
¶1. Inflation continues with little change 
------------------------------------------ 
The inflation rate in T&T was running at an annual rate 
in March of 6.6 percent, according to T&T Central Bank 
figures.  While this was only slightly higher than 6.5 
percent in February, there is still no sign of it 
falling to the Bank's target range of 4-5 percent.  In 
the absence of clear signs of any substantial easing in 
inflation, the Bank stated in April that monetary 
policy needed to remain tight to address inflation 
pressures.  It said in the coming weeks it would 
discuss with commercial banks further measures to 
absorb liquidity and dampen consumer credit.  Food 
prices, particularly fruits, vegetables and fish, 
continue to be the main drivers of inflation, currently 
running at an annualized rate of 19.3 percent. 
COMMENT: With the announcement May 10 that the U.S. 
Federal Reserve raised the fed funds rate to 5 percent, 
post anticipates that the T&T Central Bank will raise 
the repo rate later this month.  End comment. 
 
------------------------ 
¶2. BWIA job cuts coming 
------------------------ 
 
Further job cuts at state-owned airline BWIA are 
included in a new business plan, according to Curtis 
John, president of the Aviation, Communication and 
Allied Workers Union.  BWIA is in the middle of a major 
restructuring exercise to transform it into a regional 
carrier.  According to John, new BWIA CEO Peter Davies 
was clear that there would be job cuts.  These cuts are 
expected to take place over a period of two years and 
would commence after completion of the restructuring 
exercise.  Minister Lenny Saith has been reviewing the 
plan since April 14 as chairman of the Cabinet 
subcommittee on BWIA, but has yet to advise if it meets 
with government approval.  The government has promised 
yet another infusion of US$250 million to the airline 
once it has completed its restructuring plan. 
 
----------------------------------- 
¶3. T&T Business confidence weakens 
----------------------------------- 
 
According to the Corporate Confidence Index (CCI) of 
the Arthur Lok Jack Graduate School of Business at the 
University of the West Indies, business confidence in 
the T&T economy weakened in the first quarter of 2006. 
The report cited as major factors for this decline high 
interest rates, lack of available funding and a 
shortage of skilled labor.  The report stated that the 
greatest contraction in confidence came from a 
reduction in the investment outlook.  Business 
confidence declined from 44 to 10 points (on the CCI 
scale) over a six-month horizon and from 56 to 24 
points for the 12-month horizon. 
 
--------------------------------------------- 
¶4. A thousand Chinese to build aluminum smelter 
--------------------------------------------- 
 
Alutrint Ltd., a 60-40 partnership between state-owned 
National Energy Corporation (NEC) and Sural Group of 
Venezuela, announced that 1,000 Chinese workers would 
be hired to help build its aluminum smelter in 
southwestern Trinidad, and train locals to run it. 
According to an official of Alutrint, the smelter plant 
will cost between US$500-700 million and would produce 
155,000 metric tons of aluminum annually.  China 
National Machinery Equipment Import and Export 
Corporation will supply the workers to build the 
smelter and an industrial park, producing aluminum 
products such as cables, rods and auto parts.  Since 
this is a new industry for Trinidad and Tobago, the 
company (and implicitly the GOTT) believes that T&T 
workers do not have the required skills to build and 
operate such a plant.  Construction is expected to take 
more than two years, and may require 1,000 to 1,500 
workers.  Once operational, about 800 persons will be 
employed full-time at the smelter and industrial park. 
 
PORT OF SP 00000590  002.2 OF 002 
 
 
Both Alutrint and Alcoa, which is developing plans for 
its own US$1.5 billion smelter to be built in the 
southwestern corner of Trinidad, are awaiting approval 
from the T&T environmental regulator before commencing 
construction. 
 
AUSTIN