Professor of International Business and Principal of the University of the West Indies Five Islands Campus, Densil Williams, says the latest report from the International Monetary Fund that Antigua’s economy is recovering but facing headwinds from multiple external shocks should not be seen as a bad statement
The IMF said in their report that this expected rebound is supported by tourism and construction activity, but output is expected to return gradually to pre-pandemic levels by 2025 reflecting scarring effects from the pandemic.
Williams, in an interview with State Media ABS that coming from the pandemic, the report is not bad at all
“The report really makes for very important reading for Antigua and Barbuda, and it has pointed out some very important things that have developed in the economy post the pandemic. So, issues to do with the recovery of GDP, though not to a pre-pandemic level, it is on the right path. So, the recovery is very stable,” he said
The IMF report also spoke to the improvement in the fiscal position and also made critical mention of the responsible way in which the cost-of-living crisis has been managed.
“And I think that’s a good sign because what you didn’t want is to manage the cost-of-living crisis in a way that you put yourself into exorbitant, extremely high debt and therefore would actually distort the fiscal discipline that you’re that is supposed to be underpinning macroeconomic stability. So, the IMF made a very good observation that the cost-of-living crisis was handled in a very responsible way while subsidies were given. It was very targeted,” Williams added
He said Antigua and Barbuda’s debt-to-GDP
ratio have now been reduced from 102%, going down to 91%, and is expected to go down again in 2023. “So in all, that’s a good sign. But then the IMF spoke about the headwinds that we have to be careful of and one of the things that you have to look at is the level of investments. For example, as the report identified, the credit to private sector, banking credit to the private sector is still very low. And as you would appreciate, in a time like this, the private sector has to be a bit more robust in terms of its investment portfolio so that it can drive the levels of growth that are needed because the public investment has so much and no more that it can do,” according to Williams
He said now is the time for the private sector to step up to the plate
“So, you’re going to need a private sector to step up and you’re going to need a banking sector to be able to fuel that kind of liquidity to the private sector to generate the type of growth,” he explained
Meantime Williams said the report failed to make a significant observation about the investment in higher education.
“If the Antigua and Barbuda economy is to achieve the mission of being an economic powerhouse in the Caribbean, then there has to be an investment, a significantly more as well in the tertiary post-secondary, tertiary education sector. So skills based alone will not get you to be an economic powerhouse. You have to invest in the higher skills that are going to drive digitalization, artificial intelligence, critical thinking, and all those kinds of things. So, I’m a bit disappointed that the report did not make heavy wind of that. Instead, it keeps us in this realm of continuing to be a developing country, talking only about skills, investments” he added
According to the latest IMF report, Antigua and Barbuda’s economy is on a gradual recovery path, following a sharp contraction in real output of 20 percent in 2020 due to the COVID-19 pandemic.
Growth according to the IMF is estimated at 5¼ percent in 2021, driven by a rebound in tourism and construction activity.
“Despite the surge in international energy prices, inflation was subdued in 2021 due to price controls on utilities, fuels, and public transportation. The growth momentum is expected to carry into 2022 and 2023, with real GDP projected to expand by 6 and 5½ percent respectively, supported by strong tourist arrivals, foreign direct investment in the hospitality sector, and public sector projects” the IMF stated
However, output will return to pre-pandemic levels only by 2025 due to the scarring effects of the pandemic, the report said.