GRENADA: IMF warns of further problems for Grenadian economy

The International Monetary Fund (IMF) says the Grenada economy is expected to contract by more than six per cent in 2009 with a further two per cent decline this year.

The Washington-based financial institution said that the Grenada’s economy has been hit hard by the global crisis and the downturn has been deeper than expected, reflecting the strong drag of the global crisis on tourism receipts, Foreign Direct Investment (FDI), and remittances.

It said that tourism, a key growth driver, is expected to experience a 20 per cent decline in stay over arrivals, while FDI is almost at a standstill.

The IMF said that construction, an important source of employment, is projected to fall by 35 per cent, the fourth consecutive year of double-digit declines.

“As a result, real Gross Domestic Product (GDP) is expected to contract by more than six per cent in 2009, with a further two per cent decline in 2010, before seeing positive growth,” the IMF said noting that falling prices of international commodities in the first half of last year and weak domestic demand have pushed consumer prices down, with inflation projected to be negative 0.4 per cent during 2009, compared to 5.2 per cent during 2008.