Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

DOMESTIC ECONOMIC DEVELOPMENTS

growth prospects remain relatively favourable. Projections are for the world output to expand by 3.3 per cent in 2019 and 3.6 per cent in 2020. In light of downside risks, which have the potential to affect anticipated gains, growth in the advanced economies is projected to decelerate to 1.8 per cent in 2019 and 1.7 per cent in 2020. More significantly, economic activity in the United States of America, one of the region’s major trading partners, is expected to expand by 2.3 per cent in 2019 and soften to 1.9 per cent in 2020, as fiscal stimulus continue to unwind. Other noteworthy economies include the UK, which despite headwinds associated with Brexit, is expected to grow by 1.2 per cent in 2019 and Canada, forecasted to expand by 1.5 per cent in that same year. Consistent with the prospects for the aforementioned countries and regional efforts to spur growth, some strengthening is projected for economic activity in the ECCU in the short to medium term. Forecasts are for enhanced activity in all member territories and ultimately for the currency union. It is anticipated that the improvement will be influenced by buoyancy in the construction sector, supported by positive developments in some of the major

economic sectors, including hotels and restaurants, agriculture, livestock and forestry, wholesale and retail trade, transport, storage and communications and real estate, renting and business activities. Additionally increased foreign direct investments is likely to influence growth, as member countries continue to benefit from the Citizenship by Investment Programmes. Forecasts for the near-term point to strengthened construction-related output driven by activity in both the private and public sectors, more so in the private sector. Activity in the private sector is likely to remain buoyant as work progresses on a number of tourism-related construction projects in member territories, including St Kitts and Nevis, Saint Lucia, Dominica and Antigua and Barbuda. In the public sector, construction activity is also projected to rise in most ECCU countries. The focus will be on road and other infrastructural developments, including a new cruise ship berth and secondary school in St Kitts and Nevis, port re-development and enhancement in Antigua and Barbuda, airport development in Saint Lucia, air and sea port development in Anguilla and geothermal-related development in St Vincent and the Grenadines.

______________________________________________________________________________ 16 Eastern Caribbean Central Bank

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