Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST KITTS AND NEVIS

and capital spending plans of the government with knock-on effects on growth. Financial risks reflect increased credit costs for the Federation’s major trading partners, the USA, the UK and the European Union as the Federal Reserve and other central banks become less accommodative. Structural damage and impairment of the major productive sectors posed by weather related threats from hurricanes and flooding represent additional risks to the downside. On the upside, the economy of St Kitts and Nevis could benefit from generally positive global economic growth, specifically in its major trading partners. Continued buoyancy in the economy of the USA and a diminution of global financial risks could help the country to retain its current economic trajectory. Value added in the hotels and restaurants sector, a proxy measure of activity in the tourism industry, is estimated to have risen by 9.9 per cent in 2018, which compares favourably with the 0.7 per cent expansion in the previous year. Developments in the sector were driven by a 7.0 per cent increase to 1,276,855 in total visitors, compared with Real Sector Developments

a 13.1 per cent improvement in 2017. Total visitor arrivals strengthened, attributable to the improved performance in the number of cruise ship passengers and stay-over arrivals. The number of stay-over visitors, whose contribution to value added is relatively more important, increased by 1.5 per cent to 116,607 in 2018, in contrast to a 0.8 per cent decrease observed in 2017. The boost in stay- over arrivals was largely attributed to a recovery in visitors from the United States of America the largest source market, by 3.2 per cent to 69,283 in contrast to a decline of 1.0 per cent in 2017. The major contributing factor to the performance of the USA market was increased direct marketing and airlift in the major gateways to the destination, while the hosting of regional events; the St Kitts Music Festival and the Caribbean Premier League boosted

______________________________________________________________________________ 81 Eastern Caribbean Central Bank