• Economic Survey of the Caribbean 2007-2008

According to ECLAC's Economic 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). 
Source: ECLAC

• Economic Performance and Outlook for 2008

The economy of Montserrat is estimated to have expanded in the first quarter of 2008 relative to the
corresponding period of 2007. Growth was fuelled by developments in mining and quarrying,construction, wholesale and retail and transport.Consumer prices fell by 0.8 per cent, on an end of period basis.
Economic prospects for the rest of 2008 are positive, based on the outlook for construction and mining and quarrying. Construction activity is expected to drive economic growth in 2008. However, the
growth prospects for Montserrat are subject to downside risks which include, the threat of volcanic activity, further increases in food and oil prices, a larger than expected slow down in the global
economy and a fall in the rate of implementation of the Public Sector Investment Programme (PSIP).
Source: ECCB Economic and Financial Review.March 2008

• Economic Performance for 2006

Sourced from: The ECCB 2006 Economic Review

Since the destructive volcanic eruptions in the mid-1990’s, the small island of Montserrat found themselves on the brink of virtually being incapacitated to conduct any form of economic activity. Half of their population of 10,000-12,000 persons migrated to other territories. Nevertheless, the current population (estimated at 5000 people) appears to be ‘weathering the storm’ in some aspects; agriculture production has increased in the first half of the year, where there was a threefold increase in crops harvested. A decent control of import payments caused a narrowing of the trade deficit, but most of all, precise fiscal management of government operations (one of the mainstay contributors to the GDP) shifted the fiscal deficit from $12.4m in the first half of 2005 to a surplus of $0.6m in 2006.

• The Threats of Nature

The economy of Montserrat must still maintain caution due to the unpredictable element of another volcanic eruption. The great Adam Smith, leader of the school of classical economists, stated that subsequent to the correct operations of a market system then economic development can take place. A good market system must encompass a high demands, and a responsive supply system to meet people’s demands, and this is a great part of what hinders on the progression for the island of Montserrat. Tourists demand for the country has been slowly declining, and there is a fragile quality of the agricultural sector as a result of pending environmental conditions (e.g. volcanic ashes).

The overview of 2006 economic performance is marginally sufficient, increased construction and fiscal operations is commendable, however, the points mentioned above are essential in taking the proper initiative. Having a ‘tourist thriving’ island’s GDP mostly contributed by construction and government operations is not enough, and currently a sustainable development plan is being conducted, where the Strategic Objectives are:

Strategic Objectives for 2007

• To promote the retention of the present population and encourage the return of Montserratians from overseas.
• To promote prudent economic management, sustained growth, a diversified economy and the generation of employment opportunities
• To promote human development and well-being and enhance the quality of life for all people on island
• To ensure good governance by strengthening public administration and promoting civil society.
• To improve and expand external relationships to facilitate Montserrat's integration into the regional and global environment.
• To ensure that Montserrat's development is environmentally sustainable and includes appropriate strategies for disaster mitigation.