Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST VINCENT AND THE GRENADINES

estimated contractions in the production of feed (11.5 per cent) and bananas (8.6 per cent). Construction activity moderated relative to that in the corresponding period in 2017, attributable in part, to the low implementation rate for public sector infrastructural projects and the deceleration in residential construction. Value added in this sector, which accounted for approximately 8.4 per cent of overall output, is provisionally estimated to have risen by 2.2 per cent, following the more robust pace of 6.4 per cent in the previous year. Public sector construction, proxied by capital expenditure, fell by 29.6 per cent to $68.4m, reflecting the continued slow pace of implementation of government’s capital programme. Private sector activity helped to mitigate the weaker public sector capital spending, as observed by the 4.8 per cent increase in outstanding credit to construction firms. Meanwhile, activity in the residential sub-sector eased during the period, as reflected in a slowdown in lending for residential construction and renovation. Outstanding credit to this area grew by 1.6 per cent, lower than the rate of 3.7 per cent observed in the corresponding period of 2017. Meanwhile, growth in the real estate, renting and business activities sector, which accounts for the largest

contribution to GDP, remained subdued with a growth rate of 1.4 per cent, slightly lower than its performance in the previous year.

According to preliminary estimates, output in the agricultural sector is estimated to have recorded negative growth, reflecting a number of persistent logistical issues associated with the sector. These included the challenges faced by farmers and hucksters in obtaining foreign exchange from Trinidad and Tobago, which persisted during the early months of 2018 and which created a disincentive for cultivation by some farmers. Following a 3.8 per cent expansion in 2017, output in the sector is estimated to have contracted by 1.7 per cent in 2018. The weak performance was primarily driven by a decline in non- banana output (1.7 per cent). While initial estimates indicated strong advances in cocoa production, contractions were registered in other produce such as ginger, pumpkin and cabbage. This contraction was only partly offset by an estimated marginal improvement in banana output. Meanwhile, fish landing and export is assessed to have accelerated by 7.4 per cent in 2018, partly attributable to increased activity in fishing of lobster and other shellfish for the local and export markets. Particularly, fishing exports doubled

______________________________________________________________________________ 110 Eastern Caribbean Central Bank