Economic and Financial Review - June 2019

June 2019 Economic and Financial Review ANTIGUA AND BARBUDA

Barbuda remained healthy. The growth in credit outpaced the expansion in deposits, which resulted in an increase in the ratio of loans and advances to deposits. The ratio stood at 67.3 per cent at the end of June 2019, up from 65.7 per cent in December 2018, well below the prudential threshold of 75.0 to 85.0 per cent. Concurrently, overall asset quality in the banking sector continued to improve during the review period, but remained slightly above the prudential level of 5.0 per cent. The ratio of non-performing loans to total loans continued to trend downwards to a rate of 5.6 per cent at the end of June 2019, from 6.4 per cent six months earlier. This improvement was due in part to the increase in outstanding credit coupled with improved underwriting practices by commercial banks. Meanwhile, the capital adequacy ratio (CAR) of the banking system continued to strengthen to 37.3 per cent, which remained comfortably above the prudential threshold of 8.0 per cent. External Sector Developments Preliminary trade data indicated that the merchandise trade deficit increased by 1.8 per cent to $878.8m in the first six months of 2019, relative to the previous half year’s level. The higher deficit was

primarily associated with growth in the value of imports, which rose by 3.7 per cent to $922.5m. This outturn was on account of the higher volume and value in the imports of manufactured goods (32.0 per cent); machinery and transport equipment (14.5 per cent) and other commodities and transactions which was valued at $19.7m from a low of $0.4m in the first half of the previous year. These expansions were driven by higher e-commerce activity as well as cargo related to the port redevelopment project. The increases were partially tempered by contractions in the value of beverages (19.5 per cent), mineral fuels and related materials (12.4 per cent) and food and live animals (3.1 per cent). The advance in import payments were partly mitigated by a $16.9m pickup in the value of exports, largely driven by growth in the value of re-exports of machinery and transport equipment, namely sailboats associated with yachting activities in the first half of the year.

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Eastern Caribbean Central Bank