Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST KITTS AND NEVIS

Canadian and UK markets, could boost visitor arrivals from those markets. The recent announcement of an additional American Airlines flight out of Dallas Forth Worth, Texas commencing on 25 May to 17 August 2019, complements another recent airlift initiative by Sun Country Airlines which commenced services in December 2018 and will continue until 20 April, 2019. These developments add to pre-existing airlift services by United Airlines, American Airlines services out of Miami and New York, USA; Delta Airlines and winter service from Air Canada Rouge. The hosting of events such as the annual St Kitts Music Festival and matches for the Hero Caribbean Premier League T20 Cricket tournament in August will help to boost visitor arrivals during the traditional “offseason”. The optimism associated with prospects for stay-over visitors is also echoed by the cruise sub- sector, in line with increased berthing capacity afforded by the anticipated completion of the second cruise pier. On balance, the number of total visitors is projected to increase, driven by higher stay-over and cruise ship passenger arrivals. Additionally, the combination of developments in both the construction and the hotels and restaurants sectors will generate positive spin-offs for the wholesale and retail trade; transport, storage and communications

and real estate, renting and business activities sectors. Prospects for the manufacturing sector, particularly in the area of electronics, are cautiously optimistic, tempered by the recent announcement of the imminent closure of a longstanding manufacturing plant in March 2019. Inflationary pressures are anticipated to remain moderate but to nudge up in tandem with buoyant economic activity and possible increases in international energy prices. The outlook for the fiscal accounts points to some moderation in the fiscal performance. The large overall surpluses recorded in 2018 are estimated to narrow in 2019 consistent with a budgeted decline in CBI receipts an increase in capital and current expenditure. The rate of increase in capital and current expenditure is estimated to outpace that of current revenue, further contributing to smaller current and overall balances. Pressures are likely to emanate from capital expenditure and outlays on goods and services as work on several major capital projects accelerates. The deficit on the current account of the balance of payments is projected to widen, consistent with increases in value added for construction and tourism services with

______________________________________________________________________________ 92 Eastern Caribbean Central Bank