June 2020 Economic and Financial Review

June 2020 Economic and Financial Review

MONTSERRAT

EDF 11 Programme, critical projects such

Outlook

as the completion of the subsea fibre optic

Despite the negative impacts of the

link, the advancement of work on the sea

COVID-19 pandemic, the economy of

port at Little Bay and upgrades to the John

Montserrat is not expected to undergo a

A. Osborne Airport, are expected to

deep contraction in 2020. This is primarily

mitigate the impact of the decline in visitor

based on the makeup of the economy which

arrivals. In addition, continuing upgrades to

is not as heavily dependent on tourism

the road infrastructure are anticipated to

services as its other ECCU neighbours. As

provide a further boost to domestic activity.

at end 2019, the tourism industry, as proxied

by the hotels and restaurants sector,

However, downside risks dominate as the

accounted for only 2.2 per cent of the

future course of the pandemic is still

island’s GDP. Notwithstanding its

uncertain in respect of its severity and

relatively small size, the industry is still an

persistence. While the government’s fiscal

important driver of growth, given its

position will continue to be challenged, the

interlinkages with other key sectors of the

budgetary support received from the UK

economy, including construction, wholesale

government will contain fiscal and debt

and retail trade, and transport, storage and

pressures. Another critical downside risk is

communications. By contrast, the public

the above average Atlantic hurricane season

sector, which accounts for approximately

projected for 2020. The possibility of a

30.4 per cent of the island’s GDP, is

major hurricane making landfall would

expected to be the main engine of growth as

undoubtedly exacerbate an already fragile

major infrastructural projects continue

economy.

throughout the second half of the year. With

funding provided by DFID, the UK

Caribbean Infrastructure Fund and the EU

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