Economic Survey of the Caribbean 2007-2008

According to the survey the economies of the ECCU continued to show positive growth for the sixth consecutive year. In 2007, preliminary data indicated that growth slowed to 5.2% from 6.3% in 2006 as many public and private construction activities geared towards the CWC were completed. In addition there was a significant contraction in the tourism sector, which actually declined by 0.6% in 2007 compared to 6% in 2006. Fuelled by hikes in oil and food prices, especially in the last quarter of 2007, the rate of inflation increased to 6.1% from 1.3% in 2006 and is expected to continue on an upward trend in 2008. Economic growth will continue to slow but remain positive in 2008, projected at 3.8%, mainly influenced by the slowdown in the United States economy and rising international oil, food and other commodity prices.

In 2007 growth was strongest in Anguilla (21%), St Vincent and the Grenadines (6.9%) and Antigua and Barbuda (6.9%) while Hurricane Dean, which struck in August 2007, negatively impacted on the growth rates of Saint Lucia (1.7% compared to 4.9% in 2006) and Dominica (1.8% compared to 3.8% in 2006). Despite the challenge of continuous volcanic activity in Montserrat, the economy grew by 2.8% compared to negative growth of 3.8% in 2006. Intermediate growth of 3% was recorded in both St Kitts and Nevis while growth in Grenada was 4.4%. The main impetus of growth continued to be the construction sector with spill over effects into mining and quarrying, transportation and communication, electricity and water and banks and insurance. Construction activity will remain robust in 2008 driven by the private sector and the Public Sector Investment Programme (PSIP).

Economic Performance

In recent years, Anguilla’s economy has grown rapidly. The surge in their growth is attributable to the drastic expansion of the tourism and construction sectors. In 2006 the country’s economy grew by 10.9%. This is due largely to a continual increase in foreign investments in luxury tourism. Since the country has few natural resources, the government gains income primarily from import duty, accommodation tax and stamp duty, which have all increased in 2006.

With the dramatic growth in Anguilla’s tourism, an expansion in the construction sector was anticipated. This expansion created a demand for labour which could not be satisfied locally. There has been mass migration of workers from the rest of the Caribbean, as well as India, to alleviate the labour shortage problem. To capitalize on the sudden rush of migrant workers to the island, the government increased the immigration labour fees in May 2007 and revised its immigration policy.

The boom in Anguilla’s economy was foreseen to have drastic effects on the country’s rate of inflation. The Eastern Caribbean Central Bank recorded Anguilla’s inflation rate as 8.4% in 2006. Partly to blame was the universal increase in oil prices in 2006 which led to increased costs for fuels and other imports. However, increased spending and growing construction were other factors that led to the large inflation rate. The government of Anguilla has taken a few steps to curb the rate. Firstly, in an effort to curtail spending, the government increased the fiscal reserve. Secondly, to slow the rapid growth of the construction industry, which is fuelled by Anguilla’s popularity as a luxury resort island, the government suspended foreign direct investment in tourism related projects. Projects were suspended from 2006 to July 1st 2007. However, the government plans to extend this suspension period since construction on previously approved works is still in progress. Government also planned to extend the implementation time of local projects to slow development.
Anguilla Budget Address 2007
Government of Anguilla: Public Relations
Government of Anguilla. Ministry of Home Affairs

Energy Policy - Strategy for change

Anguilla currently depends on imported fossil fuels for electricity generation and the transportation sector. A significant aspect of fossil fuel use is price volatility, which makes economic planning difficult. The ramifications for small island nations such as Anguilla are serious. In the face of escalating oil prices and increasing competition to access a limited supply in the region, Anguilla has little bargaining power relative to larger island nations. A near-future scenario could see Anguilla unable to access sufficient fuel oil to meet its increasing demand.

By initiating a transition from the exclusive use of fossil fuels for electricity generation and transportation to a greater dependence on indigenous renewable resources, Anguilla will benefit by reducing its carbon emissions, providing economic and educational opportunities for its residents and enhancing its global reputation as a leader in environmentally sound and sustainable development. source: The Anguilla National Energy Policy: 2008-2020