(BROOKLYN, New York): Reports from the Caribbean say that an International Monetary Fund (IMF) staff team recently visited Grenada for the 2018 Article IV consultation and held discussions with the island’s authorities, business community, and social partners.
A concluding statement described the preliminary findings of IMF staff at the end of the official staff visit (or ‘mission’), as part of regular consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to borrow from the IMF, as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.
Grenada’s economy made important strides in recent years, achieving an impressive debt reduction of 37 percentage points of GDP since 2013, improving the framework for fiscal policy, strengthening the financial system, upgrading governance, and creating a better business environment. The authorities are to be commended for continued progress in these areas while collaboratively consulting with social partners. Recent Developments and Outlook.
The Grenadian economy grew by an estimated 4.5 percent in 2017, driven by strong activity in construction, tourism, and education sectors. Weather-related weaknesses in agriculture have, however, been a headwind. Unemployment, while falling, remains high (23.6 percent in 2017). Inflation is low, falling below 1 percent, supported by the peg to the US dollar. The 2017 current account deficit increased by 3.5 percentage points of GDP to 6.75 percent of GDP, reflecting rapid import growth.
FDI is estimated at 8.5 percent of GDP, driven by tourism and proceeds from the Citizenship-by-Investment (CBI) program. Bank credit has recently shown signs of incipient growth as non-performing loans continue to decrease helped by economic growth and increase in property prices. In contrast, credit union lending (which now makes up a quarter of total credit), grew briskly by some 20 percent.
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