St. Kitts and Nevis projects positive economic growth in 2012

Eastern Caribbean Central Bank (ECCB) Headquarters

BASSETERRE, ST. KITTS, DECEMBER 14TH 2011 (CUOPM) – The Eastern Caribbean Central BANK (ECCB) is projecting a 1.5 percent growth rate in the St. Kitts and Nevis economy in 2012. Minister of Finance, the Prime Minister the Rt. Hon. Dr. Denzil L. Douglas said that while growth will be flat for 2011, the economy could return to a positive growth path in 2012 when output is projected to expand by 1.5%.

He said the pattern is consistent with the trends observed in the OECS group. “In 2010 the domestic economy contracted by 2.7% – a 3% improvement over the 5.6% decline recorded in 2009.

During this year, steady recovery was experienced by both the Manufacturing and Tourism Sectors which are projected to grow by 6% and 5.9% respectively. However, this will be insufficient to offset the effects of the slow recovery being experienced by the Construction Sector and Distributive Trades,” said Prime Minister Douglas as he delivered the 2012 Budget Address in the National Assembly on Tuesday. Summarizing the Balance of Payments Account which records all receipts and payments between the Federation and the rest of the world, Dr. Douglas noted that in 2010, the Current Account deficit increased by 0.6% to $464.3 million or 25.5% of GDP at market prices. “This marginal increase is mainly attributed to an increase in the net importation of goods and services by 9.3% to $486.9 million or 26.7% of GDP.

The rise in net goods and services can be attributed to an increase in outflows for merchandise for the Construction and Manufacturing Sectors and an upturn in activity in tourism. The Services Account surplus decreased by 31.6% to $59.3 million or 3.3% of GDP as a result of a decline of 4.4% in travel receipts and an expansion of the deficit for transportation of 24.8% due to an increase in global oil prices,” Dr. Douglas said.

He disclosed that the surplus on the Capital and Financial Account declined by 5.6% to $471.0 million or 25.9% of GDP in 2010. Net Foreign Direct Investment expanded significantly by 35.5% to $380.8 million or 20.9% of GDP when compared to 2009 which is attributed mainly to a 70.2% increase in land sales.

However, this significant increase in direct investment inflows was insufficient to offset the Current Account deficit resulting in an overall deficit of $2.8 million or 0.2% of GDP,” said Prime Minister Douglas.