Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

ANGUILLA

return to full operations and demand from major source markets continues apace. In addition, access issues are expected to improve as airlift increases in line with the return to normal traffic at the Princess Juliana Airport in St Maarten, Anguilla’s primary gateway. Increased output in the tourism sector will have an important knock-on effect on wholesale and retail trade, transport, storage and communications. Furthermore, strong support is expected from the construction sector, as work on key infrastructure such as the Blowing Point Terminal, the Clayton J Lloyd International Airport and all public schools will accelerate in 2019. Much of the central government’s capital programme will be supported by grant aid provided by the UK government as part of a three-year package of assistance to rebuild critical infrastructure. There are critical downside risks to the outlook . A key one relates to the possibility of a no-deal withdrawal of the United Kingdom from the European Union and what such an eventuality may portend for critical aid to Anguilla’s capital reconstruction programme. Closely aligned to this, is the potential effect of Brexit on the British pound, which can negatively affect the purchasing power of UK travellers. In addition, a faster-than-expected slowdown

in the US economy, further aggravated by a possible escalation in trade tensions between the United States of America and China, could dampen global growth and negatively impact the demand for leisure among travellers in key source markets. Furthermore, the non- divestiture of ANGLEC shares could pose liquidity issues for the central government and impair its ability to honour maturing debt obligations.

Real Sector Developments

Following two consecutive years of contraction, economic output rebounded in 2018, primarily led by construction and wholesale and retail trade.

______________________________________________________________________________ 21 Eastern Caribbean Central Bank