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2018 Annual Economic and Financial Review ST KITTS AND NEVIS
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Eastern Caribbean Central Bank
in 2019, relative to the performance in
2018.
The positive outlook is fuelled by
higher value added contributions from the
hotels and restaurants, construction and
agricultural sectors
.
An increase in
construction will reflect continued public
investment combined with ongoing private
sector activity. The public sector investment
programme will reflect road resurfacing in
both St Kitts and Nevis, the renovation and
construction of public buildings, as well as
completion work on the second cruise pier
prior to the commencement of the cruise
season in 2019. Developments in the private
sector will be underpinned by further
investments in the room stock on both islands,
coupled with other service related projects that
are either about to commence or are
approaching an advanced stage of activity.
Developments in the tourism industry will be
augmented by increases in airlift and the
anticipated bump associated with the
completion of the second cruise pier. The
impact of developments in the construction
and hotels and restaurants sectors will likely
generate positive externalities with favourable
knock-on effects on other major sectors
including; wholesale and retail trade,
transport, storage and communications, real
estate renting and business activities and
financial intermediation sectors. Higher real
sector activity could induce inflationary
pressures in the domestic economy.
A smaller fiscal surplus for the Federal
Government is anticipated, consistent with a
more modest outlook for non-tax revenue and
sustained public sector related capital
expenditure. Tax revenue receipts is
estimated to remain buoyant in tandem with
real sector activity, however the effect may be
tempered by higher current expenditure
reflective of recent policy pronouncements in
the 2019 Budget.
There are a number of downside risks that
could negatively impact the outlook and
result in slowdown in the forecasted rate on
growth.
One of the main ones include a
possible strengthening in global commodity
prices, particularly fuel and food and the
attendant impact on the overall fiscal balance
and the domestic cost of doing business. The
anticipated departure of Britain from the
European Union (Brexit) and the possibility of
a “No-Deal” exit also represents an outlying
risk to the Federation, from which
7.5 per cent of stayover visitors originate.
Lower than expected inflows from the CBI
programmes could also affect both the current