January 27, 2006
ECCU shows growth despite weak tourism,

Despite a weak tourism performance and declining agricultural output the Eastern Caribbean Currency Union (ECCU) recorded an estimated 4 per cent growth in the year 2005, analogous to the 2004 growth ratio in the Eastern Caribbean region.

Eastern Caribbean Central Bank Governor, Sir Dwight Venner, disclosed the findings during the annual Eastern Caribbean Currency Union economic review, aired last week Thursday throughout the Eastern Caribbean.{{more}}

This growth was attributed to a sharp expansion in public and private sector construction activity, partly due to the preparations for the Cricket World Cup in 2007.

According to the Governor, increased activity in wholesale and retail trade, transportation and communications, and the banking sectors also contributed to growth in 2005.

Despite a decline in the performance in tourism last year, somewhat weaker than in 2004, Sir Dwight explained that stay-over arrivals to the currency union as a whole declined marginally, due to the lingering effects of hurricane Ivan on Grenada while the number of cruise visitors declined, following a record number of cruise passengers in 2004.

He noted that the ECCU also recorded a decline in output in the agricultural sector in 2005 due to the weak performance of the traditional export crops, bananas, sugar, nutmeg and cocoa.

Sir Dwight confirmed that the rate of inflation in the currency union for 2005 was estimated at 3.5 per cent, due to the surge in international oil prices and other commodities such as cement, steel and other construction materials.

“The ECCB paid particular attention to its objectives of maintaining currency and financial stability in the currency union… the low rate of inflation ensured the maintenance of the purchasing power of the currency, while the high level of foreign exchange reserves enhanced the external stability of the EC dollar,” the Governor stated.

However, according to Sir Dwight, despite the difficulties faced in 2005, no threats to the stability of the financial system emerged in 2005. He noted that the banking system experienced growth in its assets, as well as an increase in capital and high levels in liquidityn