Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST VINCENT AND THE GRENADINES

continues to be impacted by low room stock and limited opportunities for building a local brand. The sector may be further enhanced by more targeted efforts to improve tourism receipts in important components such as sightseeing, entertainment, shopping for local goods, as well as food and beverage. Other downside risks relate to the continued low implementation rate of infrastructural projects and the uncertainty in the global environment from ongoing trade tensions, the challenges related to Brexit negotiations and slowdown in a number of advanced economies. These developments could limit tourism demand and foreign investment.

In addition, one of the most notable risks for small island states such as St Vincent and the Grenadines is the threat of extreme climatic events. The effect of climate change has increased the intensity and frequency of natural disasters, which could pose significant social and economic costs for the island. While St Vincent and the Grenadines has made the initial steps in establishing a contingency fund, the potential wide-ranging impacts of such extreme events suggest that additional options for resilience and adaptation may be required.

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