MEFD January 2021

Published: Monday March 1st, 2021

Domestic economic activity during the month of January continued to be largely impacted by the ongoing Novel Coronavirus (COVID-19) pandemic. Tourism sector output remained contracted, as widespread containment measures dampened the high value-added air component, and the dominant sea segment remained suspended. However, foreign investment-led projects, combined with post hurricane rebuilding works, provided some impetus to the construction sector. In price developments, the domestic inflation rate narrowed sharply during the twelve months to December 2020, underpinned by a reduction in fuel costs. On the fiscal front, the overall deficit widened considerably during the first six months of FY2020/21, as the fallout associated with COVID-19 and Hurricane Dorian, resulted in a reduction in total revenue and a significant rise in aggregate expenditure. In the monetary sector, the narrow measures of bank liquidity improved, as domestic credit expansion trailed the moderated gains in the deposit base. However, external reserves contracted, owing in large measure to the decline in foreign currency inflow from real sector activities.

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