Annual Economic and Financial Review -December 2018

D O M I N I C A

Overview

loans exceeded the prudential benchmark during the period under review. Economic activity in Dominica is likely to improve further in 2019, based on expected developments in key sectors. Furthermore, the overall fiscal balance is anticipated to deteriorate, mainly owing to a rise in expenditure for the recovery effort. The merchandise trade deficit is likely to widen, largely reflecting the sustained importation of construction material. Downside risks to this outlook include a deceleration in Citizenship by Investment programme funds; the receipt of fewer grants than expected, which could slow down the pace of recovery efforts; and

Preliminary estimates indicate that the Dominican economy expanded by 0.5 per cent in 2018, buoyed by growth in major sectors, led by construction, after hurricane Maria in September 2017 5 . Consumer prices rose by 2.8 per cent on an end of period basis. While the central government’s fiscal operations resulted in an overall deficit, the total disbursed outstanding debt decreased. In the banking system, monetary liabilities and domestic credit expanded, whereas net foreign assets declined. The commercial banking system remained liquid, but nonperforming

______________________________________________________________________________ 45 Eastern Caribbean Central Bank 5 In keeping with international standards, the ECCB updated the terminology used to describe economic activity in the ECCU. Accordingly, the Bank now reports real change in the economy using real Gross Domestic Product (GDP) at market prices and not Gross Value Added (GVA) at basic prices as used in previous reports of the Annual Economic and Financial Review (AEFR). However, GVA will remain applicable for output by sector.