BASSETERRE, St. Kitts — As the vaccination of citizens and residents against the Novel Coronavirus continues across St. Kitts and Nevis, Prime Minister Dr. the Honourable Timothy Harris said his Team Unity administration is now shifting its attention to returning the Federation to its strong pre-COVID-19 economic position.
Prior to the arrival of the first two cases of the virus into the Federation, St. Kitts and Nevis stood as an example of a well-managed small island state.
“The prolonged impact of the pandemic will continue throughout 2021, affecting countries at varying levels, but there is reason for optimism,” said Hon. Harris. “For St. Kitts and Nevis, despite the estimated deep contraction in economic activity in 2020, the economic outlook is forecast to be modest with an estimated growth of 5.5 percent in 2021 and 5.0 percent in 2022.”
Dr. Harris indicated that his administration has implemented a fiscal strategy for the medium term (2021 to 2023), where one of the objectives is to facilitate recovery and reignite the economy by adopting a pro-growth approach to the development and execution of the capital budget for 2021 and beyond.
“We expect that the key sectors that will drive our economic recovery will include construction, manufacturing, agriculture, ICT and services including tourism,” said Dr. Harris. “Notably, construction activity, which generally contributes about 16 percent to GDP, would be positively impacted by ongoing projects such as the resurfacing of the island main road and residential construction. The construction of other major projects including the solar farm, the new Basseterre High School and health centres around the island is also expected to contribute to the projected growth in 2021.”
According to Dr. Harris, his Team Unity Government is taking every necessary measure to help rebuild the economy by continuing to provide support to various sectors through the provision of tax incentives and other financial and policy-based support.
“Examples of these will include the First Time Homeowners initiative whereby duty-free concessions are provided on materials each year,” said Dr. Harris. “Up to February 2021, duty free was provided on residential building materials totalling $4.6 million. Tax exemptions on building materials and equipment were also provided for larger non-residential projects. We have the Government Employees Mortgage programme and the Citizens Mortgage Facility all being executed through the Development Bank.”
Dr. Harris urged citizens and residents to take the COVID-19 vaccine as “the vaccination programmes put us further along the path to recovery in St. Kitts and Nevis.”
Financial Secretary in the Ministry of Finance, Hilary Hazel, said she expects the world economy to have economic growth of 5.5 percent in 2021 as the world in the process of opening back up and returning to a state of pre-COVID normalcy.
“In the United States, it is expected that that region will grow 5.1 percent,” said Ms. Hazel. “This is essential for us here in the Caribbean.
“We expect Latin America and the Caribbean region to grow by 4.1 percent and for us here in the Federation,” said Ms. Hazel. “This is consistent with all the projections made by the Eastern Caribbean Central Bank for the Eastern Caribbean Currency Union economies, which are expected to return positive growth in 2021.”
Ms. Hazel predicted that the tourism sector would continue to be slow with prospects for better performances in the 2022 and 2023 tourism season.
“There are still relatively high levels of uncertainty in relation to the prospects of recovery,” said Ms. Hazel. “The prospects are much more improved for 2021 as opposed to the experiences in 2020.
“We are expecting that the negative experiences that we have had, in terms of the construction sector which saw a -16.5 percent growth in 2020,” she said. “In 2021, we are expecting a rebound of this sector which will grow by 8.9 percent and thereby contribute in the vicinity of 14 percent to our Gross Domestic Product (GDP).
“The Financial Intermediation Sector is expected to grow by 2.9 percent and contribute around 12 percent to GDP,” said Ms. Hazel. “Our real estate and business services sector is expected to grow by 2.8 percent and contribute around 10 percent to GDP.
“Public Administration in 2020 was the only sector to experience positive growth around 3.8 percent and in 2021 we expect this sector to grow by 4.3 percent again contributing around 10 percent to GDP.
“The education sector which also includes our offshore education facilities would be expected to grow by 5.1 percent and contribute around 8 percent to GDP,” concluded Ms. Hazel. “In terms of our economic recovery, the pathway rests heavily on our ability to have government, businesses and the general public, finding a way to coexist with COVID-19.”