The latest report from the Eastern Caribbean Central Bank paints a bleak picture of SVG’s economy moving forward.
In its annual economic and financial review December 2020 the ECCB said based on available data, the economy of SVG contracted by 2.7 per cent in 2020 in contrast to a 0.5 per cent expansion the previous year. It said the negative out turn was associated with broad based declines in all the productive sectors due to the debilitating effects of the COVID-19 pandemic and that these effects have further dimmed prospects for 2021, by ratcheting up downside risks.
The bank further noted that socioeconomic developments associated with the explosive eruption of the La Soufriere volcano have significantly hampered the economic prospects of the island and that the subsequent contraction in activity in the key sectors will have grave implications for the overall economy going forward.
The bank’s outlook for SVG further noted that the fallout in the economy will not only be reflected in depressed real sector developments, but also in a deterioration of public finances and include: lower revenue collections consistent with an economy struggling to recover; increased government expenditure related to health and disaster management on three fronts: the eruption of the La Soufriere volcano, the COVID-19 pandemic and a persistent dengue fever outbreak.
It was also noted that expenditure pressures will be further compounded by rehabilitation and reconstruction of damaged infrastructure, government initiated hotel construction, port development and road works and the perennial threat of damage from an active hurricane season.
On the upside, the bank’s latest report said due to the present structure of the economy, SVG weathered the pandemic infused global economic downturn better than its more tourism-dependent regional counterparts and any inflows of grants /aid are likely to expedite the recovery process.
