Growth in the local economy is expected to be sustained in 2016, driven by continued improvements in the construction industry and growth in tourism, according to Prime Minister Dr. Kenny Anthony.
In his New Year’s address, the Prime Minister said increased foreign direct investment in the hotel sector is expected to be the main impetus for the growth in the construction sector.
However, this projection is subject to downside risks related to the global outlook of the economy, developments in mainland China, a slowdown in emerging market economies and movements in commodity prices, particularly oil.
In providing a report on the performance of the economy in 2015, Dr. Anthony said most economic sectors showed signs of recovery within the first nine months of 2015, as the construction sector gained momentum amid renewed confidence in the economy.
“This was supported by continued buoyancy in tourism, agriculture and other services,” he explained.
Dr. Anthony said construction activity was led by the private sector as work commenced on the construction of the Royalton Hotel (the former Smugglers Resort), among others.
This increased level of activity was reflected in a 13.5 percent increase in the importation of construction materials over the period from January to September 2015.
“The tourism sector continued to accomplish record performances, with a 6.4 percent increase in total arrivals over the January to November period,” he remarked.
An increase of 10.1 and 2.6 percent in cruise and stay over arrivals respectively over the period contributed to higher visitor expenditure, which stood at an estimated $414.5 million in the first half of the year.
Meanwhile, higher levels of domestic and export demand were reflected in a 6.3 percent increase in manufacturing production.
“The output of food and food products increased by 21.6 percent, corrugated paper and paper board by 12.5 percent, wood and wood products by 11.6 percent and furnishings by 16.1 percent. From all vantage points, these increases are welcome and encouraging,” Dr. Anthony said.
Further, the agricultural sector also experienced mixed fortunes during the review period.
He said, while there were declines in banana exports and livestock production overall, increases were recorded in pork production and vegetable production.
But purchases by supermarkets and hotels increased by an estimated 12.0 percent to 6,648 tons, reflecting in some measure, the success of the CFL farmer certification programme.
“Fiscal balances continue to show improvement. An overall deficit of $-27.2 million was recorded for the first half of the fiscal year 2015/16, representing a 55.8 percent reduction from the $-61.6 million in 2014/15. Total revenue and grants increased by 9.0 percent to $507.7 million while total expenditure remained relatively flat with a 1.4 percent growth to $534.9 million.”
This resulted in a current account surplus of $47.4 million in the first six months of the fiscal year compared to $19.6 million in the previous year.
Notwithstanding the improved fiscal performance over the first half of the financial year, Dr. Anthony cautioned that significant risks remain in managing local debt.
“We have to continue to inspire confidence in the management of our economy and contain reckless increases in our debt level,” he stated.