Economic and Financial Review - June 2019

June 2019 Economic and Financial Review DOMESTIC ECONOMIC DEVELOPMENTS

2018. Disbursements of foreign loans to central governments stood at $299.0m, compared with $222.1m at the end of June 2018. Meanwhile, loan amortisation amounted to $277.3m from $305.6m. Consequently, the aggregated impact of central governments’ fiscal operations resulted in a net inflow of $21.6m, in contrast to a net outflow of $83.7m in the first six months of 2 018. Of the other major flows, gross inflows of official grants decreased by 19.0 per cent to $106.8m, primarily reflecting lower inflows to Grenada, Montserrat, Saint Christopher (St Kitts) and Nevis and Saint Lucia. Outlook Near-term forecasts for the economy of the ECCU remain generally favourable, despite developments in the global economy. The International Monetary Fund, in the July 2019 update of the World Economic Outlook, forecast global output for 2019 at 3.2 per cent. The revised projection reflected a downgrade of 0.1 percentage point from the update in April 2019, an indication that global growth remains subdued as, inter alia, trade tensions between the USA and China escalate and Brexit-related uncertainties persist. Growth in advanced economies, particularly the

USA, the UK and Canada, is projected to hold firm in the short-term. The prognosis for the foregoing major trading partners, coupled with the positive performance of the domestic economy thus far, sets the momentum for a relatively optimistic outlook for the latter half and a promising outcome for the year 2019. While initial short-run forecasts indicate uneven growth across countries, the economies of all member territories are projected to expand in 2019 and remain on a positive growth trajectory into 2020. Consequently, on an aggregate level, economic activity in the ECCU is expected to accelerate in 2019 and register growth of approximately 4.0 per cent. The improvement in economic performance of the currency union is likely to be driven by anticipated robustness in a number of the major economic constituents, including, but not limited to, hotels and restaurants, construction and other ancillary sectors. Support from the inflows emanating from the Citizenship by Investment Programmes is expected to persist and sustain the growth momentum.

In addition, the overall outlook for the region is partly premised on some major

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Eastern Caribbean Central Bank