Government has expressed optimism in its prospects for the local economy in 2015, stating that barring unforeseen events or developments, the economy is expected to return to a “trajectory of growth”.
Prime Minister and Minister of Finance, Dr. Kenny Anthony, made those remarks in his New Year’s Address on Sunday.
The prime minister said his optimism on the outlook of the economy is “anchored on the strengthening of the global economy, particularly our principal tourism market, the United States of America”.
Below is Dr. Anthony’s full excerpt on the economy and its outlook:
5.0 THE ECONOMY
I now turn to a subject that is on the lips of everyone; the economy.
Although we are not yet out of the woods, we are seeing some good, sustained progress in 2014.
We are trending positively in terms of net foreign investment, in the hotel sector and elsewhere. The international community has renewed confidence in Saint Lucia, in its leadership and in its people.
We are building a sustainable economy and providing jobs for Saint Lucians.
As you heard earlier, the economy showed some signs of strength in our leading sector, tourism. However, the momentum towards a return to growth continues to be undermined by weaknesses in the construction and manufacturing sectors.
We experienced a moderate rise in inflation during the first three quarters of last year. That has now abated. Inflation is now trending downwards on account of lower fuel prices. This is another welcome development.
5.2 FISCAL PERFORMANCE
With respect to public finances, central government’s fiscal position improved in the first half of the fiscal year, 2014-2015. This was mainly due to higher revenue receipts and lower expenditure. Total revenue and grants is projected to increase by 2.3 per cent while total expenditure will remain flat, resulting in a current account surplus of $5.6 million and a lower overall deficit of 5.2 per cent of GDP. Accordingly, this has led to a deceleration in the rate of increase in public debt to 2.1 per cent compared with the previous three years.
It really is unfortunate that we did not succeed in reducing the fiscal deficit even further. Of course, the explanation lies in our failure to secure agreement among all parties to contain and reduce the cost of the Public Service.
We have reached agreement with some unions that is, the unions under the umbrella of the Trade Union Federation. I thank them for coming to the negotiating table and understanding that we all must put the needs of the country first. Of course, I am enormously grateful to those unions for accepting a wage freeze but as I have explained in the past, a wage freeze addresses future costs not existing ones. So even with a wage freeze, other measures will be necessary to contain our recurrent expenditure. Wages and salaries form a substantial portion of Government’s expenditure and we must, collectively, find a stable, sustainable solution in the shortest possible order.
5.4 OUTLOOK IN 2015
I am optimistic about the prospects for 2015. Barring unforeseen events or developments, I expect our economy to return to a trajectory of growth.
This optimism is anchored on the strengthening of the global economy, particularly our principal tourism market, the United States of America. Of course, the situation in Europe is worrisome but of that group, our other major source market for tourists, the United Kingdom, appears to be holding its own.
More importantly, domestic real economic activity is expected to recover in 2015 on account of stronger performance in the construction sector supported by continued growth in tourism and lower inflationary pressures due to expectations of falling fuel prices.