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2018 Annual Economic and Financial Review
EXECUTIVE SUMMARY
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Eastern Caribbean Central Bank
E X E C U T I V E S U M M A R Y
Weakened growth for some of the major economies in the latter half of 2018 punctuated
somewhat the outlook for global growth in the near term. Expansion in the international
economy debilitated, hence overall growth for the year was estimated at 3.6 per cent compared
with growth of 3.8 per cent in 2017. According to the IMF’s World Economic Outlook (WEO)
for April 2019, a deceleration is forecasted for global growth for 2019 and 2020 to 3.3 and 3.6
respectively, driven by a moderated pace of economic activity in advanced economies.
Notwithstanding the deceleration, growth prospects over the near-term are relatively positive.
Particularly, forecasts are for an expansion of the US economy, one of the major trading partners
of the Eastern Caribbean Currency Union (ECCU) and an important source market for stay-over
tourists. According to the April WEO, the US economy is expected to expand by 2.3 per cent
in 2019 and 1.9 per cent in 2020. Among the key US economic indicators for 2019, the
unemployment rate is projected to be 3.7 per cent and inflation 2.0 per cent. Monetary policy is
not likely to tighten further from the position at December 2018, when the funds rate was raised
to 2.5 percent.
Against the backdrop of these anticipated developments in the global economy, economic activity
in the ECCU in 2019 is expected to continue with growth in all member countries. The
expansion in 2018 were largely driven by construction and tourism activity, supported by the
auxiliary sectors, which will all contribute to the impetus for growth in 2019. Though moderate,
inflationary conditions prevailed as prices for petroleum products and food remained elevated.
The merchandise trade balance for the region deteriorated influenced by higher levels of imports,
mainly of construction materials to sustain the activity in that sector. On a consolidated basis,
the overall fiscal situation improved, turning around to register a surplus. This outcome was
the result of an expansion in the current account surplus, as revenue collections surpassed current
outlays. The buoyancy in revenue was mainly associated with stronger inflows from the