IMF Executive Board Concludes 2007 Article IV Consultation with St. Vincent and the Grenadines. No. 08/33

The economy is enjoying its second year of vigorous economic growth. Output grew at close to 7 percent in 2006, the highest in the last decade and well above potential (estimated at 4¼ percent). Economic activity was sustained by construction and government services. In 2007 growth remained strong, despite disappointing tourism arrivals, due largely to tourism-related investments and government capital expenditure. Inflation has risen, mostly reflecting the higher international oil and food prices, and is expected to reach 8.2 percent by end-2007. The current account deficit is expected to remain high in 2007-08 on account of higher imports for various tourism-related projects, and capital spending by the government. Credit to the private sector expanded by 14¼ percent in 2006, attributable to the Cricket World Cup (CWC) and tourism-related activities.