Finance Minister says local economy in record-breaking performance
Despite the ever-present threat of external shocks, it is predicted that the juggernaut attitude of the Turks and Caicos Islands economy will continue.
This revelation was disclosed by Deputy Premier and Minister of Finance Hon. E. Jay Saunders during his presentation of the 2022/23 estimates of expenditure in the House of Assembly on May 3.
The finance minister pointed out that local authorities and the international rating agencies believe that as long as the strong performance in the tourism, construction, and real estate sectors remain, Real GDP will continue to grow.
“They are forecasting a greater than 7% growth in 2022, and an average growth of around 5% for the following 3 years – i.e. 2023, 2024, and 2025,” Saunders told the House, pointing out the main economic drivers should be tourism, construction and real estate.
“We are projecting that economic growth will be fueled by continued strong recoveries in the tourism, construction, and the real estate sectors,” he said.
He said the positive forecast came on the heels of estimates that the TCI economy grew by more than 10% in 2021. However, Saunders bemoaned the fact that notwithstanding the very strong growth last year, the GDP remains below pre-pandemic levels.
“The economy is simply catching up, after a significant decline of approximately 27% that it experienced in 2020. Our Government will continue to use all the tools at our disposal to expand and diversify the economy, and most importantly create opportunities and prosperity for all our people,” he promised.
He also promised that the PNP Administration would apply the capital development programme to spur increased activity in the private sector, and to help further accelerate economic growth.
He told the house that there has been a bullish run in Import Receipts, especially in construction.
“As an example, total merchandise imports – i.e. imports into the country – for calendar year 2021, were valued at $485.9M, which was a year-over-year increase of approximately $136M or 39% over 2020. And I am happy to report that 2022 is looking equally as strong,” he said, stating that for the first three months of 2022, merchandise imports increased by $59.7M over the same period in 2021.
“In the first quarter of 2021, Merchandise Imports were valued at $93.9M. This year, first quarter imports were at $153.6M. That’s a 64% improvement,” he crowed.
He stated also that despite the negative effects of the COVID-19 pandemic on the economy, the TCI was able to maintain its BBB+ Credit Rating in 2021, and is aiming for a higher rating this year.
Saunders pointed out, however, that despite the positive growth prospects, government is mindful of lurking unforeseen challenges.
“There are always lingering threats of new variants of the COVID-19 virus spreading, persistent market disruptions, supply chain challenges, and rising inflation,” he said.
THE ECONOMIC FALLOUT FROM THE RUSSIAN/UKRAINE CONFLICT
Minister Saunders pointed out that the most significant threat to the TCI at this time is the Russian invasion of the Ukraine.
“The Russia/Ukraine War is the most significant conflict in Europe since World War II. It is having significant negative effects on the world – including here in the TCI. And the fallout is expected to get worse before it gets better,” he warned.
He reminded the House that in April, the International Monetary Fund (IMF) cut its global growth projections for 2022 and 2023 to 3.6%, which represents drops of 0.8% for 2022, and 0.2% for 2023, from the forecasts published in January.
“The World Bank has also cut its global growth expectations for 2022 from 4.1% to 3.2%. The effects of the Russia/Ukraine conflict are worsened by the global supply chain issues, which have resulted in increased energy and food prices.
“The United States, our largest trading partner, has reported that its inflation rate now stands at 8.5%. Higher prices for basic items have pushed the average inflation for this fiscal year significantly beyond the 6% that was originally forecast.
“If the Russia/Ukraine conflict and the global supply chain problems continue for much longer, there is a high probability that global investors may become timid and pull back on their investments.
“If this happens, it will have an adverse effect on our Foreign Direct Investment flows.
Thankfully, and through the goodness of God, so far, the investment interest in our Bautiful by Nature Turks & Caicos Islands remains robust,” he said.
He announced that Government was closely monitoring developments and reactions of global markets and would make adjustments to its policies in the event it becomes necessary.
“And as we have consistently done, we will ensure that the poor and vulnerable are protected from the worst effects of this crisis,” he said.