Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST VINCENT AND THE GRENADINES

Outlook

outcome. Although the sector was previously impacted by the difficulties faced by hucksters in remitting foreign exchange from Trinidad and Tobago, an agreement was brokered by the Central Bank in the last quarter of 2018 which would facilitate the remittal of funds by traders, and consequently, some recovery in the agricultural sector in 2019. The sector is also expected to be bolstered by increased production of cocoa, coffee, fruits and vegetables as well as the identification of new regional markets. Activity in the fishing sector is also likely to improve in light of a proposed agreement with Rainforest Foods, to facilitate the export of fish, lobster and other shellfish to regional and international markets. The development of the medicinal cannabis industry may also positively impact output and employment in the sector and help to offset the dampening effects from the traditional agricultural sector. Output in the selected manufacturing sub- sectors is anticipated to decelerate as reconstruction activity in a number of the islands wanes. This development is expected to be compounded by the continued contraction in the grains component of the sector. Meanwhile, construction activity is projected to regain some momentum in the coming year. Private sector construction

The economic outlook for St Vincent and the Grenadines is expected to moderate in 2019, as the country continues to capitalize on the initial successes on the operations of the Argyle International Airport as well as from developments from the 2019 budget . Accordingly, the economy is expected to expand by 1.2 per cent in 2019. The economy is anticipated to benefit from the introduction of weekly year-round flights by American Airlines and Air Canada Rouge, from major cities in the United States of America and Canada. The weekly services are expected to boost the hotels and restaurants sector, which is estimated to strengthen in 2019. Consistent with this development, activity in the transport, storage and communications and agricultural sectors are projected to improve. The favourable outlook for the sector is however contingent on business reform and productivity improvements as well as enhanced marketing in both traditional and non-traditional source markets. The upgrade of a number of local tourism plants would also contribute positively to this outlook.

Developments in the agricultural sector are also likely to positively impact this growth

______________________________________________________________________________ 118 Eastern Caribbean Central Bank