Economic and Financial Review - June 2019

June 2019 Economic and Financial Review ANTIGUA AND BARBUDA

greater impetus for growth through consumption and investment. The outlook for 2019 is however subject to some uncertainties, reflecting risks from both the external and domestic environment. Specifically, headwinds from the global environment, associated with continued tensions between the USA and China and the inability for the United Kingdom to reach an agreement with the European Union (EU) may derail global growth and by extension growth in the local economy. Moreover, inflationary pressures are likely to intensify from greater global trade and geopolitical tensions. Domestically, one of the most significant threats to growth and development remains the impact of natural disasters. This threat is likely to continue for the remainder of the season given the recently-updated forecast for an active hurricane season. The fiscal operations of the central government are likely to deteriorate, associated with the financing of the operations of the UWI campus. In the financial sector, while negotiations between Bank of Nova Scotia and the government are expected to be finalised in the near term; any challenges in reaching an arrangement may disrupt the economic momentum through domestic credit conditions. Notwithstanding these downside risks, there may be a few

upside surprises, including the possibility of a near-term agreement between the United States of America and China which could positively impact global growth. The outlook may also be further boosted by possible improvements in government’s fiscal operations emanating from reforms in tax administration from recent legislative developments as well as enhanced receipts from the Citizenship by Investment Programme (CIP). The opening of the Five Islands campus may also generate sizeable positive spillovers on growth, in light of the increasing regional demand for higher education. Real Sector Developments Available data suggest that the economy of Antigua and Barbuda expanded at a favourable pace, albeit lower than the growth level observed in the corresponding period of the previous year. This assessment was supported by the mixed performance of the tourism industry and a deceleration in the construction activity, reflecting a slowdown in both private and public sector investment spending.

The level of activity in the tourism industry, one of the main drivers of the economy, is estimated to have moderated in the first six

29

Eastern Caribbean Central Bank