Minister of Finance, the Prime Minister Dr Denzil Douglas said that while growth will be flat for 2011, the economy could return to a positive growth path in 2012 when output is projected to expand by 1.5 percent.
He said the pattern is consistent with the trends observed in the OECS group.
“In 2010 the domestic economy contracted by 2.7 percent — a 3 percent improvement over the 5.6 percent decline recorded in 2009. During this year, steady recovery was experienced by both the manufacturing and tourism sectors, which are projected to grow by 6 percent and 5.9 percent respectively. However, this will be insufficient to offset the effects of the slow recovery being experienced by the construction sector and distributive trades,” said Douglas, as he delivered the 2012 budget address in the National Assembly on Tuesday.
Summarizing the balance of payments account, which records all receipts and payments between the Federation and the rest of the world, Douglas noted that, in 2010, the current account deficit increased by 0.6 percent to $464.3 million or 25.5 percent of GDP at market prices.
“This marginal increase is mainly attributed to an increase in the net importation of goods and services by 9.3 percent to $486.9 million or 26.7 percent of GDP. The rise in net goods and services can be attributed to an increase in outflows for merchandise for the construction and manufacturing sectors and an upturn in activity in tourism. The services account surplus decreased by 31.6 percent to $59.3 million or 3.3 percent of GDP as a result of a decline of 4.4 percent in travel receipts and an expansion of the deficit for transportation of 24.8 percent due to an increase in global oil prices,” Douglas said.
He disclosed that the surplus on the capital and financial account declined by 5.6 percent to $471.0 million or 25.9 percent of GDP in 2010. Net foreign direct investment expanded significantly by 35.5 percent to $380.8 million or 20.9 percent of GDP when compared to 2009, which is attributed mainly to a 70.2 percent increase in land sales. However, this significant increase in direct investment inflows was insufficient to offset the current account deficit resulting in an overall deficit of $2.8 million or 0.2 percent of GDP,” said Douglas.
