2020 Annual Economic and Financial Review

2020 Annual Economic and Financial Review

DOMESTIC ECONOMIC DEVELOPMENTS

livestock and forestry sector shrank by 7.7 per cent, adversely affected by lower demand by hotels and restaurants and extended restrictions. These contractions were partially offset by growth in public administration, defence & compulsory social security (1.6 per cent) and financial intermediation (1.0 per cent), driven in part by an increase in pandemic-related spending and supportive fiscal policies. Inflation Consumer prices in the ECCU exhibited a deflationary trend during the period, associated with the slump in global crude oil prices and lower global demand caused by pandemic-related lockdowns. Six of the eight member countries posted declines in overall prices in 2020, with the sharpest fall of 2.9 per cent recorded in Montserrat. The two countries which registered increases were Antigua and Barbuda (2.8 per cent) and Commonwealth of Dominica (1.7 per cent). The lower price level was particularly reflected in the energy- components of the consumer basket, notably the fuel and light and transport and communication sub-indices, which

dropped by 6.3 per cent and 6.2 per cent respectively. The decline in food prices was more subdued at 1.6 per cent. The fall in energy and food prices was partly offset by an uptick in the price levels of personal services (4.4 per cent) and clothing and footwear (3.5 per cent). Consequently, the inflation rate in the ECCU fell by 1.7 per cent in 2020, following the previous year’s decline of 0.1 per cent. The economic slowdown from the COVID-19 pandemic and increased pandemic-related expenditure resulted in a deterioration in governments’ fiscal positions. Preliminary data on the aggregated fiscal operations of central governments of the ECCU, indicate that an overall deficit of $1.2b (7.0 per cent of GDP) was generated, compared with one of $426.4m (2.1 per cent of GDP) in the previous year. Dominica posted the largest overall deficit position 1 of 16.6 per cent of GDP, while Anguilla’s fiscal balances improved to 1.4 per cent of GDP. Similarly, the aggregated primary Fiscal and Debt Developments

1 In order to make meaningful comparisons, and to account for differences among ECCU member countries, fiscal

balances are weighted by GDP where possible, rather than comparing nominal values.

3