Limited Upside For Tourism In East Caribbean
BMI View: Tourist arrivals in the East Caribbean will continue to tick up in the coming quarters, primarily on the back of a rise in visitors from the United States. However, growth in arrivals will remain below historical trend, underpinning our subdued outlook for real GDP growth in the region.
A subdued outlook for tourism will ensure that economic growth in the East Caribbean Currency Union (ECCU) remains below levels seen during the years prior to the 2008-09 global financial crisis. Indeed, slower growth in tourist receipts and industry value means that less tax revenue will be generated and fewer jobs will be created, thus weighing on private consumption and reducing the need for fixed investment into the sector (see 'Tourism Weakness Will Drag On Regional Economic Growth', September 3 2013). While we forecast that real GDP growth in the ECCU will strengthen to 1.8% and 2.1% in 2014 and 2015 respectively, from 0.9% in 2013, this is much slower than average real GDP growth of 5.6% during the five years preceding the financial crisis.
Mixed Outlook For Growth In Major Sources Of Visitors
|Past The Worst, But Subdued Growth Ahead|
|ECCU - Real GDP, % chg|