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International Monetary Fund
St. Lucia faces significant policy challenges in the aftermath of Hurricane Tomas. It is experiencing an urgent balance of payments need that would result in a severe economic disruption. The government is focused on achieving medium-term debt sustainability. The policies outlined tackle urgent rebuilding needs and appropriately aim to maintain macroeconomic stability. Executive Directors support the request for funds based on the extent of the damage caused, the associated urgent balance of payments need, and the government’s commitment to limit the increase in capital spending.
International Monetary Fund. Western Hemisphere Dept.
This 2018 Article IV Consultation highlights that the GDP growth in St. Lucia reached 3 percent in 2017, sustained by robust activity in several sectors. Favorable external conditions, coupled with hotel expansions and the addition of new flights, generated a strong recovery in tourism, with stay-over arrivals rising by 11 percent, the fastest growth in the Caribbean. Backed by strong tourism inflows, the current account balance strengthened. Unemployment declined from 21.3 percent in 2016 to 20.2 percent in 2017, but youth unemployment remains high at 38.5 percent and labor force participation has fallen. The short-term outlook is favorable, but prospects beyond that are sobering. GDP growth is expected to remain buoyant in the near term.
International Monetary Fund. Western Hemisphere Dept.
This 2014 Article IV Consultation highlights that St. Vincent and the Grenadines’ economic recovery from the global economic crisis has been curbed by a series of significant natural disasters. These, combined with the economic downturn following the global financial crisis, have prevented the economy from returning to its long-term potential real GDP growth. The overall fiscal balance is estimated to have narrowed to 4.75 percent of GDP in 2014. After an estimated 1.1 percent growth rate in 2014, growth is projected to pick up modestly to 2.1 percent in 2015 on improvements in tourism and agriculture and enhanced implementation of much-needed rehabilitation and reconstruction projects.
International Monetary Fund
The sharp global recession has been taking a toll on the St. Kitts and Nevis economy. The staff report examines the St. Kitts and Nevis 2009 Article IV Consultation and request for Emergency Natural Disaster Assistance. Economic activity has weakened markedly, particularly in tourism and foreign direct investment (FDI)-related construction, the drivers of growth in recent years. The drop-off in tourism receipts, FDI, and other capital flows could lead to a worsening of the balance-of-payments position.
International Monetary Fund. Western Hemisphere Dept.
This Article IV Consultation highlights that following the opening of a modern international airport, signs of an economic recovery have emerged, with increased direct flights from major cities in the United States and Canada and renewed interests from foreign investors in tourism projects. The overall fiscal balance has improved over the past few years, and the debt to GDP ratio fell in 2017 for the first time since 2007. However, despite these positive developments, St. Vincent and the Grenadines faces challenges in sustaining the growth momentum over the longer-term. Like other Caribbean economies, its high exposure to natural disasters, limited land, narrow production and exports base, weak business competitiveness, and limited physical and human capital constrain potential growth. The financial system remains broadly stable but has vulnerable spots in the non-bank financial sector. It is important to implement structural reforms to foster private sector activity, by improving the investment environment and strengthening physical and human capital.
International Monetary Fund. Western Hemisphere Dept.
This 2019 Article IV Consultation explains that St. Lucia’s near-term growth prospects are favorable, supported by large infrastructure investment and robust tourist inflows. However, longer-term growth continues to be impeded by high public debt, lingering vulnerabilities in the financial system, and structural impediments to private investment. Diminishing policy buffers further weaken the country’s resilience to external shocks against the backdrop of aprecarious global outlook. Completion of long pending legislative initiatives, alongside stronger regional and domestic financial oversight, should provide banks with incentives to strengthen their balance sheets and increase the efficiency of financial intermediation. There is also a need to draw on supervisory and regulatory tools to respond to emerging risks from rising overseas investments of the banks and the rapid expansion of lending by credit unions. The authorities are recommended to should step up efforts to address the institutional, financing and capacity gaps in its climate and disaster response strategy. Supply-side reforms are needed to unlock potential growth by improving the business environment, reducing energy costs, enhancing labor productivity, and further diversifying the economy.
Mr. Manuk Ghazanchyan, Li Zhao, Steve Brito, and Vivian Parlak
Tourism has become the main driver of economic growth and employment and the most important source of income in the ECCU. Preserving and, possibly, enhancing the competitiveness of the tourism product is key for these countries. Unfortunately, the evidence shows that tourism arrivals to the ECCU have been declining slightly while global demand for tourism is on the rise. The objective of this paper is to study the structural determinants of competitiveness for the ECCU, defined as the relative cost advantage over other touristic regions (Di Bella, Lewis, and Martin 2007). Using a gravity model, we show that proximity to North American and European markets is indeed an important competitive advantage for the ECCU. However, despite this advantage, and, in some cases, specialization in high-end tourism, regression analysis shows that arrivals to the ECCU are sensitive to relative prices. Our simulations show that mitigating supply-side constraints would improve the ECCU’s competitiveness and allow the region to regain global market shares.
International Monetary Fund. External Relations Dept.

Next year in Johannesburg, world leaders will revisit the issues raised at the 1992 Rio Earth Summit on sustainable development and the protection of the environment. For more than a decade, IMF staff have been looking at the links between the environment and the macroeconomy. Michael Keen and Muthukumara Mani, Advisor and Economist, respectively, in the IMF’s Fiscal Affairs Department and the current environmental team, explain why they are looking at the impact of climate change and resource depletion and how they are preparing for the Rio+10 Summit.

International Monetary Fund. Fiscal Affairs Dept.
This Note prepared for the G20 Infrastructure Working Group summarizes the main finding of the IMF flagships regarding the role of environmentally sustainable investment for the recovery. It emphasizes that environmentally sustainable investment is an important enabler for a resilient greener, and inclusive recovery—it creates jobs, spurs economic growth, addresses climate change, and improves the quality of life. It can also stimulate much needed private sector greener and resilient investment.