Tobago's construction industry experienced a sharp contraction in 2025, with annual cement sales plunging 41.4% year-on-year, and the quarrying and construction sub-sectors declining simultaneously and deeply, reflecting a significant ebb in construction activity and domestic investment confidence in the island. According to the 2025 Annual Economic Survey released by the Central Bank, the cliff-like decline in cement demand and the 13.9% year-on-year decrease in vehicle registration confirm each other, both pointing to the obvious weakening of residents'willingness to spend on durable goods and infrastructure, and the overall contraction of the industrial sector.
While the industry is in the doldrums, inflation pressure is rising against the trend, and the cost of living of residents is increasing. In 2025, the average inflation rate in the island reached 2.2%, up sharply from 1.0% in 2024. Food inflation accelerated from 1.3% to 2.5%, and the prices of various essential consumer goods rebounded significantly or expanded, further squeezing the real purchasing power and economic affordability of local households.
Despite the weakness of heavy industry, Tobago's transport logistics and tourism industries have shown some resilience. In 2025, freight activities increased by 2.1% over the same period last year, and the volume of heavy trucks and the frequency of inter-island freight increased; In terms of tourism, domestic travel grew by 1.5% in the first three quarters of 2025, air passenger arrivals reported by Caribbean Airlines increased by 1.3%, ferry passenger arrivals increased by 1.9%, and improved connectivity and tourist traffic provided important support to the island's economy.
Labor market data present a more complex picture. The average unemployment rate fell to 1.2% in the first three quarters of 2025, a significant improvement from 3.1% in the same period in 2024, but this change was not due to the effective expansion of jobs, but to the contraction of the total labor force. The size of the island's labor force has shrunk from 33.4 thousand to 31.7 thousand, the number of employed and unemployed people has both declined, and the labor force participation rate has also dropped from 68.5% to 65.1%, indicating that more and more people of the right age are withdrawing from the job market, and the deep worries about the quality of employment can not be ignored.
Looking ahead, Tobago's economic prospects are mixed. With the newly purchased "Blue Wave Harmony" ferry replacing the "Cabo Star" in operation, freight and passenger transport capacity will be improved in 2026, which is expected to further promote trade and personnel mobility. In addition, the increase in budget allocation may strengthen the Tobago Parliament's development strategy around tourism, agriculture, infrastructure, education and digital innovation. However, the central bank also warned that inflationary pressures may persist in the short to medium term, that the newly imposed taxes and additional fines may push up the prices of alcohol and transportation commodities, and that the cost pressures derived from the island's continued dependence on Trinidad's port facilities may also keep local prices higher than national average for a long time.
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