SVG economy showing signs of improvement – IMF

The Vincentian economy may be slowly recovering after three years of decline, the International Monetary Fund said yesterday.{{more}}

“Economic activity indicators suggest that a slow recovery may be underway, with some improvements in tourism and manufacturing,” a press release by Nita Thacker, who headed an IMF team that visited St Vincent and the Grenadines October 23 to November 1, for the annual Article IV discussions on economic developments and macroeconomic policies.

“Real Gross Domestic Product (GDP) increased by 0.4 per cent last year and is expected to grow at a rate below one percent this year. Growth is expected to reach its potential level of about three per cent over the medium term,” Thacker further said in a press release yesterday.

“Risks to the growth outlook are on the downside, especially if the recovery in advanced economies stalls. On a positive note, the decline in commodity prices, particularly fuel, has reduced pressure on inflation and on the balance of payments.

“The government’s fiscal position is expected to improve in 2012. Fiscal data for the first nine months shows that revenues were lower than projected, due to the slow recovery, but also to an apparent decline in tax compliance,” the release said.

It, however, said significant cuts to central government capital spending are projected to more than offset the lower revenues, leading to a reduction in the central government fiscal deficit.

The IMF mission met with the Prime Minister and Minister of Finance Dr Ralph Gonsalves, Director General Finance Maurice Edwards, other senior government officials, as well as members of the opposition, including Opposition Leader Arnhim Eustace.

The mission also met with representatives of the private sector and trade unions.