June 2020 Economic and Financial Review

June 2020 Economic and Financial Review SAINT CHRISTOPHER (ST KITTS) AND NEVIS

External Sector Developments

Outlook

Despite the gradual easing of containment

The merchandise trade deficit narrowed

restrictions,

economic

activity

in

by 13.8 per cent to $310.4m during the

St Kitts and Nevis is projected to contract in

first half of 2020. This development was

the remainder of 2020.

driven by sharp contractions in both import

The pandemic will continue to affect the

payments and export receipts, related to

tourism industry, even after the reopening of

measures introduced in the second quarter to

borders, as global demand is likely to remain

contain the spread of the virus and the

weak. The weakened external demand is

associated decline in household and business

expected to impact manufacturing activity.

incomes.

The government’s investment in the

St Kitts & Nevis Visible Trade

EC$M

400.0

construction and agricultural sectors,

300.0

however, could partially moderate the

200.0

100.0

decline in economic activity.

0.0

Considerable

uncertainty

surrounds

-100.0

-200.0

forecasts; nevertheless, downside risks

-300.0

18 Q1 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2

remain consequential. If the global recovery

Total Exports

Total Imports

Trade Balance

is protracted, the Federation’s rebound may

In line with the decline in visitor arrivals,

also be slower than anticipated.

gross travel receipts are estimated to have

Additionally, adverse weather remains a

decreased by 57.8 per cent to $132.5m in the

significant downside risk.

first six months of 2020. In the public

On the upside, if the global recovery

sector, external disbursements to the federal

accelerates, the forecasted contraction could

government totalled $1.5m in the first half

be milder. Moreover, the continued

of 2020, while external principal repayments

implementation of fiscal countermeasures by

amounted to $12.0m. These transactions led

the Federal Government could partially

to a net outflow of $10.6m, compared with

temper recessionary conditions.

one of $8.4m in the same period of 2019.

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