Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

DOMINICA

transactions led to a net outflow of $26.1m compared with one of $18.4m in 2017.

infrastructure Further, manufacturing output is expected to be boosted by the resumption of the production of soap after a hiatus. The overall fiscal balance is anticipated to worsen, mainly because of increased expenditure on the recovery and reconstruction effort. This outturn is however expected to be moderated by the continued inflow of funds from the Citizenship by Investment Programme and the expected steady intake of indirect taxes as a result of high imports and the recovery of the wholesale and retail sector. In the external sector, the relatively high merchandise deficit is likely to be sustained reflecting the continued import of construction material. However, exports are expected to recover to some degree as the agricultural sector rebounds. Downside risks to this outlook include a likely deceleration in revenue from the Citizenship by Investment Programme; the receipt of fewer grants than expected and/or delays in the disbursement of loan or grant funds, which could slow down the implementation of the recovery and reconstruction effort . In addition, Dominica remains vulnerable to external shocks such as adverse weather; weakening growth prospects continues.

Outlook

Economic activity in Dominica is likely to strengthen in 2019. Output of goods and services is projected to increase by 2.0 per cent in 2019, based on expected positive developments in key sectors. Risks to this outlook are tilted to the downside. Growth in the construction sector is expected to continue, supported by ongoing reconstruction and rehabilitation activities in the public sector. The advancement of private sector projects such as the construction of the Citizenship by Investment funded Anichi Resorts, Jungle Bay Hotel and the Tranquility Beach Hotel, in addition to the continued repair and reconstruction of residential homes, is likely to contribute to the buoyancy in construction activity. Following the replanting of produce in 2018, the agricultural sector is projected to recover in 2019. Activity in the sector is also expected to be supported by government-led programmes such as the rehabilitation of coffee and cocoa and the expansion of vegetable production. In addition, the number of visitors is predicted to increase as the rehabilitation of tourism

______________________________________________________________________________ 54 Eastern Caribbean Central Bank