Economic and Financial Review - June 2019

June 2019 Economic and Financial Review THE COMMONWEALTH OF DOMINICA

continue to increase in line with the expanding economy. In the external sector, the merchandise trade deficit is likely to deteriorate partially reflecting the continued imports of construction materials but moderated by an anticipated expansion in exports. Additionally, the real exchange rate of the EC dollar is forecasted to remain stable, as inflationary outcomes in the ECCU are projected to move in line with that of its major trading partners. Thus, The Commonwealth of Dominica is not expected to be adversely affected by fluctuations in the real exchange rate, which bodes for the island’s competitiveness. The risks to the outlook are skewed to the downside. One of the major risks that could negatively impact fiscal operations and by extension overall economic activity, is a possible deceleration in inflows from the Citizenship by Investment Programme. Likewise, the receipt of fewer grants than expected and/or delays in the disbursement of loan or grant funds, could slow down the

implementation of the recovery and reconstruction effort. Rising trade tensions between the USA and China and stalled Brexit negotiations could dampen global growth, which can weaken the growth prospects for The Commonwealth of Dominica. In addition, The Commonwealth of Dominica remains vulnerable to external shocks such as adverse weather and a weakening of growth prospects of trading partners and friendly donor governments. On the upside, businesses in the productive sectors should continue to benefit from concessional and financing opportunities currently provided by the government. These initiatives are expected to continue to support the recovery of the private sector in the post-Maria era. Additionally, the advancement of public sector projects such as the geothermal energy plant, the sustainable housing solution project and private sector tourism projects would contribute positively to the economy.

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Eastern Caribbean Central Bank