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2018 Annual Economic and Financial Review
DOMESTIC ECONOMIC DEVELOPMENTS
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Eastern Caribbean Central Bank
Credit for utilities, electricity and water
increased by 47.4 per cent ($94.6m), in stark
contrast to a decline of 16.2 per cent extended
one year ago. Consistent with the buildup in
the construction sector and the tourism
industry, lending for these purposes grew by
6.8 per cent and 4.5 per cent, respectively.
Notwithstanding an improvement in
manufacturing activity, credit extended to that
sector declined by 6.5 per cent ($11.8m). In
addition, lending for personal use fell
marginally (0.2 per cent), despite an increase
in borrowing for durable consumer goods.
The net foreign assets of the ECCU’s
banking system rose by 5.9 per cent to
$8,736.7m, compared with an increase of
11.6 per cent during the last year.
The
improvement in the net foreign assets position
was primarily attributed to growth in the net
foreign assets of the commercial banking
sector. Commercial banks’ net external
position expanded by 15.1 per cent to
$4,081.0m, primarily influenced by an
11.6 per cent rise in their foreign assets,
notwithstanding growth of 7.8 per cent in their
foreign liabilities. The net external position of
the Central Bank fell by 1.1 per cent to
$4,655.7m, as its foreign liabilities more than
tripled.
An assessment of the commercial banking
system indicated that it remained relatively
liquid during the review year.
At the end of
December, the ratio of liquid assets to short-
term liabilities stood at 39.7 per cent, well
above the 25.0 per cent minimum established
by the ECCB’s prudential guidelines and
slightly higher than the level recorded at the
end of 2017. The loans and advances to total
deposits ratio rose marginally (0.2 percentage
point) to 58.8 per cent, which remained well
beneath the ECCB’s stipulated lower limit of
75.0 per cent.
External Sector Developments
Preliminarily, the merchandise trade
balance demonstrated further deterioration
in 2018. The deficit widened by 18.8 per
cent to $7,608.0m (37.8 per cent of GDP),
after having deteriorated by 3.6 per cent in
2017.