IMF projects more economic growth in Grenada

ST GEORGE’S, Grenada, CMC – The Grenada economy is projected to grow by 3.5 per cent this year as well as next year, the International Monetary Fund (IMF) said.

But, the Washington-based lending agency cautioned that while the country’s economic outlook is positive, “continued policy resolve and public support for reforms are critical to restoring debt sustainability, improving medium‑term growth prospects, and strengthening the financial sector”.

In a release following the conclusion of its Article IV consultation with Grenada on July 13, the Executive Board of the IMF said the projected growth would follow the economic expansion seen last year.

“The Grenadian economy grew by an estimated 4.5 per cent in 2017, driven by strong activity in construction, tourism, and education sectors. Weather-related weakness in agriculture has, however, been a headwind,” it said.

“In 2018 and 2019, the economy is projected to grow by 3.5 per cent, benefiting from supportive global economic conditions and continued strength in construction and tourism. Thereafter, growth is expected to ease to the long-term potential rate of 2.75 per cent.”

Inflation is expected to edge up in 2018 reflecting recent global energy price increases but stabilise at two per cent in the medium term.

The IMF said the primary fiscal surplus is expected to remain high in the near term, supporting rapid debt reduction, and once the public debt ratio falls below 55 per cent of gross domestic product (GDP), projected for 2020, the fiscal surpluses and the pace of debt reduction are expected to moderate.

“The external current account deficit is projected to increase to 7.5 per cent of GDP in 2018 mostly from recent increases in energy costs, but would decline thereafter as the construction-related imports and energy prices are expected to ease,” it added.

The Executive Directors commended the Dr Keith Mitchell-led government for implementing sound policies leading to a strong economic and fiscal performance and sustained debt reduction.

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