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Antigua: Country Economic Forecast: 20 Aug 2013

4 Pages Oxford Economics August 20, 2013 SKU: OFE5101526

Antigua: Country Economic Forecast: 20 Aug 2013

Antigua ended three years of contraction with modest 1.6% growth in 2012, but the pace of recovery is expected to ease slightly in 2013. The tourism sector is looking weaker than anticipated, with visitors down 6% on the year in Q1 2013, reflecting the relatively subdued US economy earlier this year. In addition, growth in non-tourism sectors is likely to be constrained by problems in the financial sector. Low public confidence in the banking system in the wake of the Stanford bank corruption scandal and the insolvency of the ABIB bank has caused three years of falling deposits and credit contraction. And with the resolution of ABIB repeatedly delayed, and not due to be completed until end-2013 at the earliest, tight credit conditions seem unlikely to end in the near term. This will hold back credit-dependent sectors such as construction and will weigh on private consumption spending. The fiscal situation remains risky. Despite moving back to budget balance and progress in reducing debt during the past three years of IMF guidance, public debt is still around 90% of GDP, among the highest in the region. And much of the recent reduction on the spending side is due to sharp cuts to public investment, which may reduce the economy’s long-run capacity. Moreover, the recent increase in revenues has been due to one-off elimination of tax arrears – the tax base remains very narrow. As a result, the fiscal system would be unable to deal with any further negative shock to the economy and renewed official assistance would probably be required.

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Antigua: Country Economic Forecast: 20 Aug 2013

Oxford Economics
August 20, 2013

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