by Linda Straker
- Head of the IMF Article IV Consultation to Grenada suggests that Grenada rebalance its job opportunities
- Mission commenced its scrutiny on 25 April 2019 and concluded on 8 May 2019
Bogdan Lissovolik, Head of the International Monetary Fund Article IV Consultation to Grenada is projecting that economic growth for 2019 will be 3.5% and has suggested that Grenada rebalance its job opportunities, so that the growth which is linked heavily to construction maintains in the long term.
The IMF Article IV Consultations is part of their usual surveillance done with member countries to assess each country’s economic health and forestall future financial problems. The mission commenced its scrutiny on 25 April 2019 and concluded on 8 May 2019. During the period the team members met with government, private sectors and a cross-section of the civil society representatives.
“For our projection, we think that there will be a gradual easing of the deficit growth, we think that in 2019 GDP growth will be about 3.5%,” Lissovolik said while explaining that 2018 was 4.2%. In March 2019, the Caribbean Development Bank projected that the island would experience 4.5% economic growth through the construction, tourism, agriculture and private education sectors.
“We assess the GDP growth for 2018 was 4.2%, it was somewhat lower than previous years where it was 5% but it is still a number that is significantly higher than what we assess as the long term potential of Grenada and also much higher than the potential in the broader Caribbean,” he said.
Pointing out that the construction industry through its robust activities are contributing to the economic growth and to the reduction of unemployment, the senior economist said that because the construction sector is an unstable industry, government needs to take action that will ensure the reduction of the unemployment rate is not lost when construction activities are no longer robust.
“On a more cautionary note, the unemployment rate continues to be on the high side although it has been declining, from the information that we have was about 22% in the middle of 2018, it’s important that it continues with reforms that help generate sustainable jobs, in part, because of the elements that are feeding into growth performance so far like construction,” he said.
“These are the elements that you cannot count on forever, in terms of being very strong, it is important to rebalance and find other sustainable job opportunities,” he said while recommending that Government embark on a strategy that will strengthen the agriculture sector through its direct link to the tourism industry as well as the development of the different components in ICT sector such as call centres and software development.
Lissovolik said that in the external situation the team access that the current account deficit which is the external deficit is about 11% is GDP. “It is on the high side, it is not particularly high it used to be higher for Grenada and other countries in the region but since it is still double digits the issue is whether there are other elements of sustainability or non-sustainability,” he said.
“In this regard, we note the Citizenship By Investment (CBI) programme has enjoyed robust inflows that supported the growth,” he said. The CBI project he said contributed both to the financing of the external deficit and to the increasing of employment through its many construction projects. Government data shows that the CBI programme contributed EC$80 million to the economy in 2018.