Economic and Financial Review - June 2019

June 2019 Economic and Financial Review SAINT VINCENT AND THE GRENADINES

global economic activity projected to expand by 3.2 per cent in 2019, based on the International Monetary Fund’s (IMF) July 2019 World Economic Outlook. The positive outlook for the economic expansion is underpinned by increased value added in key sectors such as tourism, manufacturing and agriculture. Arrangements to secure additional airlift paired with intensified marketing initiatives are expected to the expansionary fiscal policy stance of the 2019 Budget. Notwithstanding the positive outlook there are number of risks, both on the downside and upside that could change the forecast. The potential for lower economic growth in the global economy, as well as threats of natural disasters, represent significant downside risks to the 2019 economic outlook for Saint Vincent and the Grenadines. On the upside, Saint Vincent and the Grenadines is more favourably poised to benefit from the decriminalization of Cannabis than its regional counterparts. Therefore, the prompt implementation of policies and the establishment of an institutional framework to legislate for and govern the cultivation of medical cannabis holds promise of new export markets and foreign exchange earnings. The late foray into the establishment of a tourism industry on the

positively impact the hotel and restaurants sector, while sustained external demand, albeit at a reduced pace, should support increased manufacturing activity. Increased value added in the agriculture sector will reflect higher output in the other crops including; cocoa, coffee and the fisheries subsectors. A widening of the fiscal deficit is projected, consistent with mainland also represents an opportunity for policy makers to avoid the missteps of other jurisdictions in crafting a sustainable and inclusive tourism masterplan. Additionally, ongoing efforts in the agricultural sector to revitalize formerly dormant crops, including arrowroot and coffee could further strengthen the economic base and the country’s resiliency to adverse economic shocks. in Saint Vincent and the Grenadines is estimated to have expanded at a decelerated pace in the first half of 2019, relative to activity in the first six months of the previous year, attributable to favorable trends in the manufacturing, hotels and restaurants and agriculture sectors. The manufacturing sector, which comprises the Real Sector Developments Economic activity

94

Eastern Caribbean Central Bank