2019 Financial Stability Report

1.0

Overview of Financial Stability in the ECCU

to 3.9 per cent in 2019 from 4.5 per cent in

Global economic growth softened in 2019

2018. China was responsible for most of the

and is expected to remain subdued into

weakness across emerging market

2020. The ECCU financial stability report

economies.

comes at a time when the world economy is

transitioning into a state of heightened

Global growth is forecasted to accelerate

uncertainty, creating a challenging

mildly to 3.4 per cent in 2020. However,

landscape for the ECCU banking sector.

considerable uncertainty surrounds this

The current major challenges stemming

outlook. The resolution of the USA/ China

from the external environment are;

trade dispute is still uncertain and the Euro

(i) increasing trade tensions between the

Area continues to exhibit signs of weak

USA and China, (ii) government shutdown

economic growth. Within this context,

in the USA, (iii) normalisation of monetary

global growth could come in below these

policy in the USA, (iv) geopolitical tensions

forecasts.

and (v) uncertainty regarding the United

Kingdom’s (UK) exit from the European

Domestically, output in the ECCU

Union (EU).

moderated to 3.3 per cent in 2019 from

3.8 per cent in the previous year ( Error!

Global economic growth was projected at

Reference source not found. ). Softer

3.0 per cent in 2019 from 3.8 per cent in

developments in FDI related construction

2018. The weakness was broad based across

output moderated economic growth, while

advanced economies and largely attributable

resilient

consumer

spending

and

to the ongoing trade dispute between the

Government consumption expenditure

USA and China and uncertainty from UK’s

contributed to the outturn. This has

exit from the euro area. Across the ECCU’s

supported financial stability in the near term.

key trading partners (USA, UK and Canada)

However, vulnerabilities remain.

growth decelerated sharply with the UK

narrowly missing a recession. Economic

growth in emerging market economies eased

1