The International Monetary Fund’s (IMF) executive board has indicated that St Lucia’s economy grew in 2019 due to emphatic growth in the tourism industry.
“Following a slowdown in 2018, real GDP (gross domestic product) growth has picked up in 2019 supported by strong growth in tourism activities. The construction sector continued to contract in early 2019 owing to delays in public infrastructure projects but stayover arrivals grew by 7.9 in the first three quarters of the year (y-o-y),” a report from the IMF stated.
Even more good news, the country’s current account also improved, partially due to revenues from the country’s Citizenship by Investment Programme. In addition, inflation kept stable as a result of low fuel prices.
“Prudent fiscal policies and revenues from the citizenship-by-investment programme (CIP) have helped stabilising public debt as a share of GDP,” the reported.
“The commencement of large public infrastructure projects, including the redevelopment of the international airport and a comprehensive road improvement programme, is expected to substantially boost growth in 2020-22…”— International Monetary Fund Executive Board
Notwithstanding, the country’s unemployment, even with a decline, remained high at 18 per cent.
Further, credit to the private sector contracted for a sixth-consecutive year as banks adopt more conservative lending practices and resolve to reduce legacy non-performing loans. However, the credit union sector remains strong as it expands.
Noted the IMF, “Near-term growth prospects are favourable, albeit with downside risks. The commencement of large public infrastructure projects, including the redevelopment of the international airport and a comprehensive road improvement programme, is expected to substantially boost growth in 2020-22 but will push up public debt and weaken the external position.”
The downside risks to which the IMF referred include a deeper-than-expected slowdown in major source markets for tourism, energy price shocks, disruptions to global financial markets, and loss of correspondent bank relationships.
“St Lucia’s high vulnerability to natural disasters constitutes an ever-present risk to both growth and the fiscal outlook,” the reported added.