Basseterre, St. Kitts, March 10, 2023 (SKNIS):
The economy of St. Kitts and Nevis is projected to continue its recovery over the medium term, fueled by a rebound in tourism services, greater agricultural production, digitalisation, and increased investment in public infrastructure, according to a country report released by the Eastern Caribbean Central Bank (ECCB) on March 8, 2023.
The rebound of the St. Kitts and Nevis economy comes at a time when the world is still facing significant economic challenges from the negative fallout of the war in Ukraine and related sanctions, high inflation and tightening of the monetary policy where global growth is expected to slow in 2023. However, faster growth is projected in 2024. Although geopolitical developments present threats they also provide opportunities for St. Kitts and Nevis’s sustainability and transformation agenda.
The ECCB has recommended several theatres of transformation to advance the economy of St. Kitts and Nevis. These are Food and Nutrition Security; Renewable Energy for Energy Security; Broadband Connectivity for the Digital Economy; Access to Credit for Financial Inclusion; Tourism; and Social Security Reforms.
Addressing media practitioners in St. Kitts and Nevis as part of the Bank’s 2023 Country Outreach Mission on March 8, 2023, Director of Research, Statistics and Data Analytics, Teresa Smith, said St. Kitts and Nevis has great economic potential.
“St. Kitts and Nevis is the fourth largest economy in our eight-member ECCU (Eastern Caribbean Currency Union) construct, fourth largest meaning the size of its GDP (Gross Domestic Product). However, it is the third smallest in the ECCU. It comes just before Anguilla and Montserrat and therefore if you put these two things together you’d recognize then that St. Kitts and Nevis is actually doing quite well in terms of its size and its economic activity,” Ms. Smith said.
“We note that growth is recovering after the effects of the pandemic and output is on pace to return to pre-pandemic levels,” she added.
Ms. Smith said that although “there was a significant fall-off in economic activity in 2020” as a result of COVID-19, there was a rebound in St. Kitts and Nevis and the ECCU in 2021 and 2022.
“What we saw though in 2021, although there was a rebound, it was very much below the average of the ECCU. However, in 2022, there was strong rebound as we saw growth of 7.7 percent compared to 8.9 percent in the ECCU and the ECCU average,” Ms. Smith said.
“The pick-up in 2021 is worth commenting on here to indicate that because we (St. Kitts and Nevis) were slow in re-opening our borders, that’s why the growth is not as high as the ECCU average. However, we do appreciate that there was strong growth in the subsequent year, and we already recognize a great reliance on the tourism product,” Director Smith said.
In speaking to inflation, she said that should not come as a surprise given the geopolitical happenings globally.
“Inflation rose in 2022 as food prices in particular surged…there was a 10.4 percent increase period average in terms of prices,” she said.
To combat some of the economic challenges, Ms. Smith highlighted that great emphasis must be given to food and nutrition security.
“We must focus on food and nutrition security. We note that the higher cost of food imports has been passed to consumers but we need to take greater control then of our food and nutrition security so it speaks then to increasing agricultural production,” she said. “Particular attention must be made to our imports of meats, fruits and vegetables and cereals.”
Additionally, she said St. Kitts and Nevis has great potential for renewable energy in the area of solar and geothermal energy.
Also, St. Kitts and Nevis ranked second in the region in terms of mobile cellular subscriptions in 2020 and in 2022, it was rated second in internet penetration rate,
Furthermore, Ms. Smith said that in St. Kitts and Nevis adequate capital is in commercial banks and liquidity is quite high but non-performing loans are “a bit of a challenge” within the Federation.
St. Kitts and Nevis’s Debt-to-GDP has been on a decline over the past few years, commendably so, she said, but pointed out that there was an uptick in 2020 due to the response of the government to supporting persons affected by COVID-19 through several social intervention programmes and encouraging economic development in the country as well.
Director Smith also pointed out that as the St. Christopher and Nevis Social Security Board celebrates its 45th anniversary year, there is a need for critical parametric reforms to the Social Fund, which without, reserves are likely to be depleted in 2038-2043.
“We need to begin to make some reforms to the social security system,” she said.
The press conference was also attended by top and senior management at the ECCB including Dr. Timothy Antoine, Governor, Dr. Valda Henry, Deputy Governor, and Emefa Sewordor, Head of the Advisory Services Unit.