Central Bank of Trinidad and Tobago: Annual Economic Survey 2007

Financial turmoil and economic uncertainty in global markets... During 2007, the lingering effects of the sub-prime crisis precipitated a severe credit crunch leading to turmoil in global financial markets. Total losses from the crisis have been estimated at around US$ 1 trillion by the International Monetary Fund. At the same time, the sharp rise in housing loan defaults and foreclosures along with escalating oil prices spawned a discernible slowdown in the US economy, raising concerns about the emergence of a recession. During the fourth quarter of 2007, US economic growth slowed to 0.6 per cent bringing growth for 2007 as a whole to 2.2 per cent down from 3.0 per cent in 2006. The US authorities undertook a number of measures to mitigate the impact of the credit crunch and to avert the onset of a recession. These measures included sharp cuts in the federal funds rate, the introduction of a term auction facility to provide short-term liquidity support to banks in distress and a fiscal stimulus package of rebates to tax payers and tax relief to businesses of around US$170 billion. but domestic economy maintains a robust pace of growth...