Annual Economic and Financial Review -December 2018

M O N T S E R R A T

Overview Economic activity in Montserrat is estimated to have expanded in 2018 with real output growing by 1.6 per cent 8 in 2018, in contrast to a decline of 2.8 per cent in 2017. The expansion in real GDP reflected positive contributions from two key sectors; namely construction and hotels and restaurants. The consumer price index rose by 2.4 per cent, on an end of period basis. The central government recorded an overall deficit, which was largely due to an increase in recurrent expenditure. In the banking system, domestic credit, total monetary liabilities and net foreign assets increased.

Overall, liquidity conditions remained relatively stable and high, while non- performing loans declined.

The outlook for the economy in 2019 is favourable as economic growth is expected to continue. This projection is premised on positive developments from the major contributing sectors, which include construction and hotels and restaurants. The expansion of economic activity in these key sectors is expected to have positive spillover effects on the performance of allied sectors such as transport, storage and communications and the real estate, renting and business

______________________________________________________________________________ 70 Eastern Caribbean Central Bank 8 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.