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2018 Annual Economic and Financial Review ST KITTS AND NEVIS
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Eastern Caribbean Central Bank
concomitant increases in the demand for
related imports.
There are a number of downside risks that
could negatively impact the outlook and
result in a slowdown in the forecasted rate
of growth.
If inflows from the CBI
programmes are lower than budgeted, this
could pose a significant risk to the fiscal
outturn, given its contributions to both the
revenue and spending activities of the
government. The CBI programme remains a
major catalyst to tourism-related foreign
investment in the Federation. Consequently,
any diminution in the attractiveness of the
programme will threaten the sustainability of
on-going and planned FDI construction
projects and other programmes which it funds.
Another risk to the outlook is the issue of
crime and violence.
Unprecedented efforts
(community outreach and law enforcement)
are underway by the authorities to address it.
Other potential headwinds include increased
global uncertainty associated with latent trade
tensions between the USA and China and its
potential to reduce global trade and consumer
optimism both in export markets and on the
domestic front. If commodity prices increase,
especially for oil and related products, this
could undermine recent fiscal gains by
increasing the government’s operational
expenditure while exacerbating the size of
trade deficits on the external accounts.
Another downside risk, relates to physical
damage by hurricanes and floods combined
with the debilitating effects of adverse drought
conditions on agricultural output.
On the upside, the global economic outlook
appears broadly optimistic, a development that
should augur well for the export of tourism
services and the receipt of investment inflows.
Further strengthening of the USA and UK
economies could have concomitant positive
impacts on visitor arrivals and FDI inflows.
Additionally, the recent resurgence in the CBI
programme, if sustained, could auger well for
the fiscal and developmental prospects in the
near to medium-term.