Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST VINCENT AND THE GRENADINES

amidst rising trade tensions and challenges with achieving an orderly Brexit agreement. These potential risks to the global economy, as well as continuing risks of natural disasters, may cloud the 2019 economic outlook for St Vincent and the Grenadines.

improved. Meanwhile, the external account was characterised by a wider trade deficit reflecting an expansion in import payments.

The growth momentum of the economy of St Vincent and the Grenadines is expected to moderate in 2019, reflecting both domestic and international developments. Activity is projected to be supported by the continued developments from the Argyle International Airport and the impact of initiatives announced in the 2019 budget. Specifically, the country is expected to benefit from another full year of operations of the Argyle International Airport, with the introduction of year-round flights from major cities in the United States of America and Canada. These developments are likely to sustain growth in key services sectors including hotels and restaurants. However, government balances are expected to deteriorate in light of increased expenditure from initiatives announced in the 2019 budget as well as the full impact of fiscal incentives announced in 2018. The outlook for 2019 is subject to downside risks, particularly as it relates to the evolution of global developments. The International Monetary Fund (IMF) has projected that the global economy would slow to 3.3 per cent in 2019,

Real Sector Developments

Real GDP in St Vincent and the Grenadines recorded growth of 3.2 per cent in 2018, following a marginal expansion of 0.7 per cent in the prior year, reflecting positive trends across most of the main sectors .

Buoyed by the first full year of operations of the Argyle International Airport, value added in the hotels and restaurants sector, a proxy for tourism activity, is estimated to have expanded by 3.8 per cent in 2018, following a marked contraction of 18.2 per cent in 2017. This outturn largely reflected a 5.4 per cent

______________________________________________________________________________ 107 Eastern Caribbean Central Bank