Caribbean & Central America - June 2019

*** GRENADA GETS GOOD GRADES FROM IMF. Grenada has completed three years under an IMF Structural Adjustment Programme (SAP). Following its latest Article IV consultation and visit to the island, from 25 April to 8 May, the IMF reported that Grenada had entered a “virtuous circle”.

For the IMF, this “virtuous circle” is based on a state of affairs “whereby the good output performance helps to improve the fiscal position, which in turn is anchored by the fiscal responsibility”.

The IMF’s assessment is that growth in 2018 was 4.2%, however it predicts that growth will fall to 3.5% in 2019 and will then settle “over the medium term of the next few years” at around 3%.

The main concern for the IMF is unemployment, which it puts at about 22% in 2018. For the IMF, it is “important to continue the reforms that help generate sustainable jobs” in part because some of the elements currently driving growth, such as construction, “you cannot count on forever in terms of being very strong”.

The current account deficit of about 11% of GDP is another area of concern. IMF team leader Bogdan Lissovolik commented on this, saying: “We always ask in the IMF whether there are elements of sustainability or non-sustainability here and, in this regard we know that the Citizenship by Investment Programme has enjoyed robust influence that supported the growth and financing of the external deficit…So when you think about sustainability or growth obviously [you] raise the sub-issue of whether this element is going to be sustainable as well.”

*** JAMAICA’S FIRST QUARTER GROWTH. According to the Planning Institute of Jamaica (PIOJ), GDP growth in the first three months of 2019 was 1.5% year-on-year.

The PIOJ reported that the positive out-turn was based in large part on increased external demand from Jamaica’s main trading partners. It also reported increased domestic demand as a consequence of higher employment. The PIOJ reported: “The increases in external and domestic demand were facilitated by the expansion in the hotel room stock air seat capacity and flight frequency, which facilitated growth in stopover visitor arrivals.”