ST. VINCENT-PM says IMF projections “not a bad report”

KINGSTOWN, St. Vincent, CMC – Prime Minister Dr. Ralph Gonsalves has welcomed the International Monetary Fund’s (IMF) economic projections for St. Vincent and the Grenadines, saying it is “not a bad report card.”

Speaking on a radio program here, Gonsalves said that the IMF outlook for the island, released during the annual meetings of the IMF and World Bank Group in Morocco, projects economic growth of 6.2 percent for 2023.10.12.

This follows economic growth of 5.5 percent last year, with a projection of five percent growth in 2024.

In 2021, the economy grew by 0.3 percent after contracting by 3.7 percent the previous year, and 0. percent growth in 2019.

“The projections for this year are above the average for the Eastern Caribbean currency Union. The average is 4.7,” Gonsalves told radio listeners, adding that the only country in the 15-member Caribbean Community (CARICOM) grouping with a “larger number than us is Guyana because of oil.”

The Washington-based financial institution is projecting that the Guyana economy will grow to 38.4 percent this year, following growth of 62.3 percent last year.

“And next year, again, Guyana will have more than us,” Gonsalves said, referring to the just over 26 percent economic growth that the IMF has projected for Guyana next year.

“We will be five percent, that’s the projection, and the Eastern Caribbean Currency Union average is four percent, and the only one which would be above us in the rest of the Caribbean, rest of the English-speaking Caribbean, would be Guyana and then Antigua and Barbuda.”

The ECCU member countries are Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St.Vincent and the Grenadines.

Antigua and Barbuda is expected to register economic growth of 5.6 and 5.4 percent over each of the next two years.

“So, we see the growth numbers are moving in the right direction,” Gonsalves said, adding, “and you can see the activity on the ground.”

He also used the opportunity to dismiss his political critics and their alternative proposals.

“They ignore things called the climate change devastation of our country, they ignore COVID, they ignore the volcanic eruptions and the periodic droughts, they ignored that we have to transition our economy from primarily a goods-based one to a service-based one, of which education revolution play an important part, critical part, and tourism in which the international airport played an important role has played an important role and continues to play,” Gonsalves said.

“All those things ignored, you know, all this talk about their false hope dialogue,” he said about the main opposition, New Democratic Party (NDP), which is holding town hall meetings in New York and Toronto under the rubric “Hope for Home.”

He noted that the IMF outlooks said that inflation this year is projected to decline, saying, “and you’re seeing the actual numbers from 5.7 from last year to 4.4 and the following year will be 2.4.

“So that we are moving in the correct direction and line basically with what is happening in other OECS countries and certainly less than places like Barbados, Trinidad and Tobago, and Jamaica.

“Guyana, despite the amount of money which is flowing there, their inflation numbers are above ours, but they’re not too far, so this is not a bad report card despite what you hear those who wish to replace me talking about,” Gonsalves told the radio program.

Meanwhile, in releasing the outlook, the Director of the Research Department of the IMF, PierreOlivier Gourinchas, warned that commodity prices could become “more volatile, with increasing climate and geopolitical shocks.”

He said this would represent a severe risk to the disinflation strategy, noting that oil prices increased by about 27 percent between June and September before falling back more recently by about eight percent.

“Food prices remain elevated and could be disrupted further by an escalation of the war in Ukraine. Geoeconomic fragmentation has also led to a sharp increase in the dispersion of commodity prices across regions, including critical minerals. This could cause serious macroeconomic risks in the future, including climate transition.”

He said that while inflation remains uncomfortably high, near-term inflation expectations have risen markedly above target.

“Bringing these expectations back down is critical to winning the battle against inflation,” he said and stated that fiscal buffers have eroded in many countries, with elevated debt levels, rising funding costs, slowing growth, and an increasing mismatch between the growing demands on the state and available fiscal resources.

“This leaves many countries more vulnerable to crisis,” Gourincha said.