Trinidad and Tobago has made a transition from an oil-based economy to one based on natural gas. In 2004, natural gas production averaged 2.9 trillion cubic feet per day (tcf/d), an increase of 12.9% from 2003. The petrochemical sector, including plants producing methanol, ammonia, urea, and natural gas liquids, has continued to grow in line with natural gas production, which continues to expand and should meet the needs of new industrial plants coming on stream in the next few years. The major development in 2005 will be the likely opening of the fourth production module or "train" for liquefied natural gas (LNG) at Atlantic LNG. Train 4 will increase Atlantic LNG overall output by almost 50% and will be the largest LNG train in the world at 5.2 million tons/year of LNG. Trinidad and Tobago is the 5th largest exporter of LNG in the world and the single largest supplier of LNG to the U.S., supplying between 70-75% of all LNG imported into the U.S. Overall, the petroleum sector grew by 10.5% in 2004, the third straight year of double-digit growth.

The non-energy sector grew at a slower pace in 2004. Output in this sector increased by a modest 2.9% in 2004 compared to 3.8% in 2003 with the impetus coming from the Manufacturing and Services sectors. The rate of growth in the Manufacturing sector was 6.6% in 2004, thanks to the Food, Beverages and Tobacco, and Assembly-Type industries. The Services sector grew by 2.9%, led by Construction. Construction sector growth was due mainly to Trinidad and Tobago Government investment in housing and infrastructure, and ongoing projects in the energy sector. Performance in the Agriculture sector has been weak and declined by 20.2% in 2004. The decline in output resulted largely from the shrinking and restructuring of the sugar industry. Recognizing the role that energy plays in the economic life of Trinidad and Tobago, where it was the source last year of 37% of governmental revenues, the government is seeking to diversify the economy to reduce dependence on the energy sector and to achieve self-sustaining growth. The diversification strategy focuses on six main sectors: traditional manufacturing; a new technology-based industrial sector; tourism; financial services; agriculture; and small business.

The investment climate is good. Since 1992, almost all investment barriers have been eliminated. The government continues to welcome foreign investors. The government has a double taxation agreement, a bilateral investment treaty and an intellectual property rights agreement with the United States. U.S. investment in Trinidad and Tobago exceeds a billion dollars. Total foreign direct investment has averaged $700 million annually over the last decade. Among recent and ongoing investment projects are several involving U.S. firms: ISG Trinidad started operations in November 2004 in a plant that has the capacity to produce 500,000 metric tons annually of hot briquetted iron. Nucor has received approval from the Trinidad and Tobago Government to set up a plant to produce up to 1.5 million tons annually of direct reduced iron. Two aluminum smelter plants are also planned, one of them to be owned by ALCOA. The first major business-class hotel to be opened in several years bears the Marriott Courtyard brand. Hyatt has announced plans to manage a property at the multimillion-dollar port development project in Port of Spain.

Trinidad and Tobago's infrastructure is adequate by regional standards. Expansion of the Crown Point airport on Tobago is being planned, which follows opening of the Piarco terminal on Trinidad in 2000. There is an extensive network of paved roads. Traffic is a worsening problem throughout Trinidad, as the road network is not well suited to the volume of vehicles, and no mass transport system exists as an alternative. Utilities are fairly reliable in cities, but some rural areas suffer from water shortages, power failures, and inadequate drainage. Infrastructure improvement is one of the governmentís budget priorities, especially rehabilitating rural roads and bridges, rural electrification, flood control and improved drainage and sewerage. A multi-year plan for light rail transport has been announced.

Telephone service is modern and reliable, although significantly more costly to consumers than comparable U.S. service, including for wireline, wireless and broadband services. Change began this year in the wireless market when the new Telecommunications Authority invited two firms to offer competition to state-owned monopoly incumbent TSTT (co-owned by Cable & Wireless). The new wireless providers, Digicel and Laqtel, are planning to provide service by 2006. Long distance, cable and Internet services have not yet been deregulated, but the government has indicated that it will do so in those markets as well, beginning with cable TV. Internet has come into widespread use, but broadband services are limited to a few upscale residential areas, although some wireless "hot spots" have emerged. Improvements in service and price are likely as TSTT prepares itself to meet competition for Internet services in coming years.