Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

DOMESTIC ECONOMIC DEVELOPMENTS

Increased value added in the hotels and restaurants sector is anticipated, buoyed by greater demand for leisure services from major source markets, as the outlook for these economies remains generally favourable. Intensified marketing and sales efforts, increased airlift, combined with new initiatives and augmented room stock may further enhance the performance of the tourism industry. Projections for the cruise sub-sector remain positive, based on advanced scheduling of ships and on-going efforts to bolster cruise-related infrastructure. The anticipated improvement in tourism is likely to have positive spill-over effects on ancillary sectors including wholesale and retail trade, real estate, renting and business activities and transport, storage and communications, hence a further boost for the economy of the ECCU. Output in the agriculture, livestock and forestry sector is likely to strengthen, largely based on expected developments in all crops, particularly non-banana production. On- going efforts by most of the territories towards investment in agriculture, diversification within the sector and building external linkages, augur well for boosting overall value added in agriculture. Inter alia, anticipated developments with medicinal cannabis in St Vincent and the Grenadines, rehabilitation

of coffee and cocoa in Dominica, coupled with strengthening banana export in Saint Lucia are all likely to add impetus to agricultural production. In light of the broad based gains in the governments’ fiscal performance this year and the projected improvement in economic activity, the consolidated fiscal operations of member governments are projected to maintain an overall surplus position, as they continue to implement policies geared towards fiscal and debt consolidation. Notwithstanding anticipated improved current account outturns in some territories, further fiscal challenges are possible as official grant inflows wane. Capital expenditure is projected to rise in most member countries, as work on infrastructural projects progresses, especially in the hard-hit territories where rebuilding efforts are still on-going following hurricanes Irma and Maria. Despite the expected developments on the fiscal accounts and the anticipated growth, greater efforts are necessary to leapfrog the region out of its current state of low growth towards a greater thriving citizenry. Initiatives towards strengthening the fiscal and debt dynamics are imperative and must be at the forefront. These measures should include the building and strengthening of fiscal and financial buffers.

______________________________________________________________________________ 17 Eastern Caribbean Central Bank