Download St. Vincent and the Grenadines

St. Vincent and the Grenadines
Prepared by: Rajesh Ramroop
[email protected]
Last updated: January 2015
COUNTRY
St. Vincent and the Grenadines
CREDIT RATING
Real GDP growth (%) 2015
1.80%
Next General Election
Moody's
B2 / Stable
Major Trade Partners
Dec-15
Exchange Rate (XCD/USD)
US; Trinidad & Tobago; EU; Barbados
Major Exports
2.7
Bananas, eddoes and dasheen (taro), arrowroot starch; tennis racquets
GDP Composition
Agriculture, Industry, Services (64%); Industry (26%); Agri (10%)
RECENT ECONOMIC DEVELOPMENTS
ECONOMIC OUTLOOK
Real economic growth for 2014 was projected at 1.1% by the IMF and was led by the construction, manufacturing, health, education
and public administration sectors. The tourism sector continues to be greatly affected by the high costs associated with travelling to
the islands, given the absence of an international airport. For the period Jan-Nov 2014 tourists arrivals were down 0.4% compared to
the same period of 2013 due to decreases in arrivals of -0.4% - US, -1.7% - Canada, 0.3% - Europe and -4.2 % -Other). There was
also a drop in cruise ship passengers of -1% or 55,411 passengers.
Negative
INFLATION
TRADE BALANCE/ BOP
Stable
Inflation averaged -0.74% as at Sep 2014 (-0.19% Sep 2013). Inflation was projected at 2.2% for 2014 by the IMF.
Stable
As at Sep 2014 the trade balance measured XCD616.18 million (XCD649.33 million – Sep 2013). Exports measured XCD96.73
million (XCD95.02 million – Sep 2013) while imports measured XCD712.91 million (XCD744.35 million – Sep 2013). Food & Live
animals (22%), Mineral Fuels & Related Materials (20%), Manufactured Goods (17%) and Machinery & Transport Equipment (19%)
were the major contributors in imports. In exports the major sectors were Food & Live animals (57%), Manufactured goods (11%),
Machinery & Transport Equipment (16%) and Miscellaneous Manufactured Articles (14%). The current account deficit was expected
to increase from 29.2% of GDP (2013) to 32.7% of GDP in 2014.
As at Jun 2014, current revenue measured XCD252.41 million (XCD221.87 million – Jun 2013), current expenditure measured
XCD242.47 million (XCD233.88 million - Jun 2013) and capital expenditure measured XCD25.09million (XCD40.75 million – Jun
2013). Revenue was composed of tax revenues measuring XCD217.01 million and non-tax revenues measuring XCD35.40 million.
The main contributors to tax revenue were taxes on income and profits (25%), value added tax (33%) and custom taxes (18%). The
main contributors to current expenditure were personal emoluments (51%), goods and services (13%), transfers and subsidies
(27%) and pensions (12%). The overall balance measured –XCD14.80 million (-XCD36.08 million – Jun 2013) or –XCD11.03 million
(-XCD27.90 million –Jun 2013) after capital grants.
Negative
FISCAL ACCOUNTS
DEBT/
SOVEREIGN RATING
On 9 October 2012, Moody’s Investor Services downgraded the rating of St. Vincent and the Grenadines from B1 to B2, with a
stable outlook. The key drivers for the rating decision included poor growth prospects following a protracted recession and weak
recovery in tourism, significant and rapid deterioration of the government’s balance sheet and elevated vulnerability to external
economic shocks.
Stable
OUTLOOK
St Vincent & the Grenadines remains susceptible to events in the global markets. Positively its major trading partners such as the US and EU have maintained economic stability and have begun
to show signs of positive growth. A boost in tourism can be expected due to the positive outlook of the US for 2015. The Argyle airport if completed on schedule (late 2015) will also provide a
significant boost to the country’s economy and tourism sector. Investments in renewable energy resources such as hydroelectric plants and solar energy installations will aid the country against
its vulnerability to global commodity prices and the potential disruption of the Petrocaribe agreement due to current low oil prices. Due to under spending in the capital budget the fiscal deficit is
projected to measure 4.75% of GDP in 2014 (6.25% - 2013). The improvement is due mainly to the under-execution of capital projects. According to the IMF, capital spending in 2014 is now
projected to reach around XCD147 million compared to a budgeted XCD330 million in response to the December 2013 trough system (XCD151 million executed in 2013).The IMF has projected
growth of 2.6% for 2015.First Citizens Research & Analytics holds a cautious view on St. Vincent & the Grenadines and underscore the need for the completion of the Argyle airport
as well as the risks associated with the weakening government balance sheet and susceptibility to natural disasters.
Gape Growth and Inflation Rate (%)
4
Public Sector External Debt (% of GDP)
46
44
2
42
0
40
2010
2011
2012
2013
-2
-4
Real GDP
Inflation
2014
2015
38
36
2010
2011
2012
2013
2014
2015
DISCLAIMER
This report has been prepared by First Citizens Investment Services Limited, a subsidiary of First Citizens Bank Limited. It is provided for informational purposes only and without any obligation,
whether contractual or otherwise. All information contained herein has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and
estimates constitute the author’s judgment as at the date of the report. First Citizens Investment Services does not warrant the accuracy, timeliness, completeness of the information given or
the assessments made. Opinions expressed may change without notice. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein. The securities
discussed in this report may not be suitable to all investors, therefore Investors wishing to purchase any of the securities mentioned should consult an investment adviser.
DISCLOSURE
We, First Citizens Investment Services Limited hereby state that (1) the views expressed in this Research report reflects our personal view about any or all of the subject securities or issuers
referred to in this Research report, (2) we are a beneficial owner of securities of the issuer (3) no part of our compensation was, is or will be directly or indirectly related to the specific
recommendations or views expressed in this Research report (4) we have acted as underwriter in the distribution of securities referred to in this Research report in the three years immediately
preceding and (5) we do have a direct or indirect financial or other interest in the subject securities or issuers referred to in this Research report.