Economic and Financial Review - June 2019

June 2019 Economic and Financial Review ANGUILLA

some initial public sector investments aimed at refurbishing seven primary schools as well as the Princess Alexandra Hospital, the level of activity is estimated to have fallen short of the significant investment by the private sector done over the comparable period one year earlier to refurbish hotels, restaurants and affiliated establishments in preparation of the 2018/2019 tourist season. Domestic credit disbursed for home construction and renovation declined by 3.0 per cent ($6.1m). However, these flows were partially offset by a 2.1 per cent ($1.1m) increase in credit issued for construction and land development. Activity in the financial intermediation sector is estimated to have contracted in the first half of 2019, as the value of loans and advances extended by commercial banks fell by 9.1 per cent ($55.8m). This decline is consistent with the risk averse stance of the commercial banks, as well as the fact that most of the public sector investment projects are being financed through the Anguilla Programme, funded by the UK government. The consumer price index fell by 0.2 per cent on an end-of-period basis during the first six months of 2019, compared with a decline of 1.1 per cent during the corresponding period of 2018.

The main sub-indices contributing to the deflationary pressures were household furnishings, supplies and maintenance (4.4 per cent), miscellaneous (3.8 per cent), housing, utilities, gas and fuels (1.7 per cent), clothing and footwear (1.0 per cent) and hotels and restaurants (0.9 per cent). The decline in the sub-index for household furnishings, supplies and maintenance was influenced by a reduction in the price of furniture, while lower prices for personal care, jewellery and health insurances drove the downward movement in the miscellaneous sub-index. Similarly, for housing, utilities, gas and fuels, reduced prices for dwelling maintenance and repair, coupled with lower fuel surcharge costs led the decline in this sub-index. Additionally, reduced prices for both male and female footwear contributed to the fall in the clothing and footwear sub-index. The contraction in the aforementioned sub- indices was tempered primarily by a 4.0 per cent increase in the communication sub-index, along with a 2.1 per cent rise in the sub-index for recreation and culture. Quality adjustments for communication devices as well as upgrades to services offered influenced the increase in the communication sub-index, while the higher

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Eastern Caribbean Central Bank