Real GDP per capita in the ECCU had barely exceeded the pre-global financial crisis peak when COVID-19 struck; the ECCU had several years of slow growth due to structural frictions & weak price competitiveness
Real GDP per capita in the ECCU had barely exceeded the pre-global financial crisis peak when the COVID-19 pandemic struck. Following the global financial crisis, the ECCU had several years of lackluster growth, due to structural frictions and weak price competitiveness.This from the Eastern Caribbean Currency Union: 2021 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union.
The ECCU’s tourism-dependent economies have various vulnerabilities. All countries are micro-states that are vulnerable to natural disasters with significant socio-economic implications. Prior to the COVID-19 shock, many countries were already highly indebted, led by Antigua and Barbuda and Dominica with debt levels at around 80–90 percent of GDP. Several are highly dependent on uncertain Citizenship-by-Investment (CBI) revenues, which could complement domestic revenue but are also prone to sudden stops.
The financial sector also poses a major vulnerability due to its large size and persistent loan quality weaknesses.The economy has been hit hard by the pandemic, owing to the collapse of tourism. Tourism, which accounts for over 70 percent of total exports and 20 percent of GDP, has come to a halt, causing ripple effects on the economy.
Dominica’s real GDP is projected to contract by 10.5 percent in 2020, and the current account deficit to reach 19 percent of GDP, supported by financing from CBI deposits and official loans.Dominica received financing from the IMF under the Rapid Credit Facility (SDR 10.3 million, equivalent to 89.4 percent of quota) and took advantage of the G-20 DSSI initiative to help fill its external financing needs.
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