by Linda Straker
- Despite global challenges, economy will expand in 2022
- Lifting of Covid-19 restrictions in source travel markets among reasons projected for economic growth
- Public Sector Investment Programme and tourism developments will boost construction activity
The Eastern Caribbean Central Bank’s (ECCB) latest economic and financial review shows that Grenada’s near-term economic outlook hinges on several factors. However, despite global challenges such as the war in Ukraine, the economy will expand in 2022.
“In the absence of the materialisation of the macroeconomic risks related to the Russia-Ukraine war and global inflationary pressures, the economy is expected to continue to expand in 2022.” The review focused on the state of the economy from January to December 2021.
The lifting of Covid-19 restrictions in source travel markets such as the USA, UK, and Canada, as well as opportunities in the construction sector are among the reasons projected for the growth in the economy. “This expansion will be driven by the Public Sector Investment Programme and tourism developments, which will boost construction activity.” The review reflects data from February 2022 and published after the ECCB’s Monetary Council meeting held in St Lucia on the third weekend in July 2022.
“The lifting of Covid-19 lockdowns and restrictions in advanced economies will catalyse the recovery of the tourism sector, underpinned by targeted marketing strategies and Increased domestic and regional demand for agricultural and manufactured goods.” The review was prepared using data from the Government of Grenada provided by the Ministry of Finance.
It also points out that the speed of recovery could be dampened by macroeconomic downside risks such as slower global economic growth due to the adverse effects of the Russia-Ukraine war. “The ongoing supply-chain disruptions and rising inflationary pressures, could reduce real incomes and simultaneously increase costs for the productive sectors. Furthermore, climatic risks remain a continuing threat as a result of its potential to disrupt economic activity.”
In the review of the year 2021, the ECCB said that after experiencing the deepest recession in recorded history, triggered by the Covid-19 pandemic, the Grenadian economy showed signs of recovery in 2021.
Preliminary estimates indicate that Grenada’s economy expanded by 5.7% in 2021, following a contraction of 13.8% in 2020. It is estimated that the economy would need to expand by 16.0 % cumulatively to completely recover from the pandemic.