Economic and Financial Review - June 2019

June 2019 Economic and Financial Review SAINT CHRISTOPHER (ST KITTS) AND NEVIS

(St Kitts) and Nevis’ imputed share of the Central Bank’s reserves.

points to 7.98 per cent. Accordingly, the interest rate spread narrowed to 6.30 per cent from 6.35 per cent at the end of December 2018. External Sector Developments The merchandise trade deficit narrowed by $30.9m to $350.5m during the first half of 2019. This development was associated with a contraction in import payments but tempered by growth in export receipts. The value of imports decreased by 4.5 per cent to $436.3m, driven by contractions in payments for food and live animals, machinery and transport equipment, and manufactured goods. In contrast, the value of total exports went up by 13.6 per cent from the same period of the previous year to $85.8m. This outturn reflected a rise in domestic exports and re- exports by 16.6 per cent and 4.1 per cent respectively.

Measured against ECCB benchmarks, the banking system remained liquid at the end of June 2019. During the period under review, the ratio of net liquid assets to total deposits rose by 3.3 percentage points to 52.9 per cent, considerably above the ECCB minimum benchmark of 20.0 per cent. In addition, the loans and advances to total deposits ratio fell slightly by 0.8 percentage points to 40.3 per cent, but still well below the ECCB’s maximum benchmark of 75.0 to 85.0 per cent. Notwithstanding the high level of liquidity in the banking system, asset quality among financial institutions was an area of concern. The ratio of non- performing loans to gross loans stood at 25.1 per cent, 20.1 percentage points above the ECCB’s tolerable limit. When compared to the regulatory minimum of 8.0 per cent, financial institutions however remained well capitalized, with a capital adequacy ratio of 20.0 per cent. The weighted average interest rate on deposits fell by 0.03 percentage points to 1.68 per cent at the end of June 2019. Meanwhile, the weighted average interest rate on loans declined by 0.08 percentage

St Kitts & Nevis Visible Trade

300.0 EC$M

200.0

100.0

0.0

-100.0

-200.0

-300.0

15 Q4

16 Q1

16 Q2

16 Q3

16 Q4

17 Q1

17 Q2

17 Q3

17 Q4

18 Q1

18 Q2

18 Q3

18 Q4

19 Q1

19 Q2

Total Exports

Total Imports

Trade Balance

78

Eastern Caribbean Central Bank