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2018 Annual Economic and Financial Review
GRENADA
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57
Eastern Caribbean Central Bank
The near term economic outlook is
favourable. Real GDP growth is
anticipated to be comparable to the level
estimated in 2018.
This forecast is on the
basis that activity in the main economic
sectors of construction, hotels and restaurants
and education will remain strong. Inflationary
pressures are likely to be subdued based on the
forecast for lower oil prices on the global
market in 2019. The merchandise trade deficit
is forecasted to widen as imports increase to
support demand in the construction sector as
well as tourism activity. According to the
2019 Budget Estimates of Revenue and
Expenditure, a smaller overall surplus of
approximately
3.8 per cent of GDP is anticipated this year.
Similarly, the primary surplus will also trend
downwards to 6.0 per cent of GDP, but will
nevertheless surpass the primary balance
target of 3.5 per cent of GDP embedded in the
Fiscal Responsibility Act (FRA).
These forecasts are highly conditional on
developments in the global economy, given
its positive correlation with the Grenadian
economy
. In particular, threats to the outlook
include: slower than anticipated global
economic growth; natural disasters; and an
unexpected surge in oil prices. Moreover,
there are a number of domestic challenges that
could adversely impact the economic growth.
These include: capacity constraints that could
further slow the implementation of public
sector capital projects; fiscal risks associated
with ongoing pension reform and the
introduction of a National Health Insurance
Scheme; lower than projected receipts from
the Citizenship by Investment Programme
(CBI) and labour market challenges. These
threats and challenges can be mitigated
through the formulation and implementation
of reforms to engender economic and
infrastructure resilience; exercising fiscal
prudence; and building capacity to enhance
the management and implementation of capital
projects. The successful management and
mitigation of those risks could boost growth
above the level recorded in 2018.