An International Monetary Fund (IMF) team, led by Mr. Varapat Chensavasdijai, visited St. John’s during September 20-October 3, 2022, to hold the 2022 Article IV consultation. At the conclusion of the mission, Mr. Chensavasdijai issued the following statement.
Risks to the outlook are largely on the downside.
Output is expected to return gradually to its pre-pandemic level by 2025 supported by strong tourism recovery and foreign direct investment in the hospitality sector, and public sector projects.
Real GDP is projected to grow at 6 and 5½ percent in 2022 and 2023, respectively.
However, commodity price shocks can dampen domestic demand and entrench inflation.
A growth slowdown in main tourism source markets and/or renewed COVID-19 outbreaks and travel restrictions could stall the tourism recovery and deepen scarring effects.
A further appreciation of the U.S. dollar would weaken competitiveness through the currency peg.
Tighter financial conditions may put additional strain on public finances and lead to further domestic arrears accumulation.
On the domestic front, a decline in citizenship-by-investment program (CIP) revenues due to increased scrutiny of such programs by the EU and U.S. would hamper fiscal consolidation efforts.
More frequent and intensive natural disasters due to climate change pose an ever-present risk.
On the upside, a faster-than-expected recovery in tourism activity could boost growth.