Government officials have recently indicated that despite strong growth in cruise ship arrivals, the tourism sector as a whole contracted by just less than 1% reflecting continuing weak performance of the stay over segment. They said arrivals were marginally below 2010 levels and 46,000 below the peak of 140,000 attained in 2005 (this category has been trending downwards since 2005).
The former Minister of Finance for the country, Dr. Timothy Harris, who is representing St. Kitts and Nevis, in the absence of Dr. Denzil Douglas, who is Finance Minister, at the Forty-Second Meeting of the Board of Governors of the Caribbean Development Bank (CDB), taking place in the Cayman Islands this week, told delegates that notwithstanding the improved fiscal performance, “our latest estimate is that the economy contracted by a further 2% in 2011.” He was speaking at the opening ceremony of the conference on Thursday 24th May, 2012.
Negative growth was also recorded in the construction, wholesale and retail, transport and communications and business services sectors, while the manufacturing sector grew by less than 1%, in 2011.
Harris, who holds the portfolios for Trade, Industry and commerce, told members at the CDB meeting that the medium term outlook for his country is cautiously optimistic, but limited fiscal space will constrain the nation’s flexibility to respond to any adverse external shocks, related to either the continuing uncertainty in global market, or weather conditions. The pace of public sector investment will be dependent on the flow of grant contributions which account for about 69 per cent of planned capital expenditure. Private sector construction activity is expected to increase with the advancement of major resort development projects and the continuation of tax incentives for new home construction.
St. Kitts and Nevis is also hoping that the manufacturing sector will rebound after recording positive growth of 2.2 per cent in 2010, and 6.6 per cent for the first six months of 2011. This is attributed to an increase in the export of electronic components. Notwithstanding the soft market conditions in the USA, the outlook is for continued expansion of output by the manufacturing sector which is expected to benefit in the medium term from the recent conclusion of a Partial Scope Agreement with Brazil and Guyana.
Dr. Harris made known his government’s intention to again look forward to some assistance from the CDB, recognizing that over the years, the regional bank has proven itself as an important partner in the development of the various countries, and an institution they have come to trust and look to for sound advice and assistance.
Harris admitted however that although the CDB now faces some new challenges with the recent downgrading of its triple A rating, St. Kitts and Nevis would encourage the CDB to take pride in its successes, as it continues to find ways to assist countries in navigating the challenging times ahead .