9. Distributive trade and public administration are the second-largest recipients of bank credit, each receiving on average 10–11 percent of total bank loans ( Table VI.1 ). Compared with end-1996, however, the relative importance of distributive trade has fallen in most ECCU countries, while that of public administration has increased, as ECCUgovernments have increased direct borrowing (i.e., bank loans and overdraft) from the banking systems.
10. Tourism and agriculture, two of the leading growth sectors in the region, receive
reduction, more than offsetting lower tourism receipts.
Commercial banks, many of which are subsidiaries of international banks, have generally remained resilient. However, the quality of commercial bank loan portfolios is deteriorating: the ratio of nonperforming loans (NPLs) to total loans, while low, has been worsening (4.1 percent at end-June 2009) and the ratio of provisions to NPLs declined to 37.8 percent at end-June 2009, the lowest level in recent years. The financial system remains vulnerable to contagion from regional financial sector entities. ECCU
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper analyzes productivity in the Eastern Caribbean Currency Union by exploring two complementary exercises. It computes total factor productivity by extending standard growth accounting frameworks with (1) the impact of natural disasters on the stock and productivity of physical capital; (2) human capital accumulation; and (3) the impact of out-migration on labor and human capital. The paper also analyzes labor productivity, including across economic sectors. The results indicate that the historical deceleration in growth was driven mostly by the declining contribution of total factor productivity, which resulted in stagnation in the aftermath of the global financial crisis. Labor productivity measures show that labor is largely allocated in the sectors with relatively lower productivity.
This 2005 Article IV Consultation highlights that economic activity in the Eastern Caribbean Currency Union (ECCU) has accelerated since mid-2003 owing to an acceleration of activity in the tourism and construction sectors. Inflation has been stable and monetary aggregates have been expanding rapidly, reflecting continued growth in the demand for money and confidence in the banking system and the quasi-currency board arrangement. Against this background, Executive Directors have called for strengthening fiscal consolidation, lowering the debt ratios, and ensuring the consistency of fiscal policies with the currency board arrangement.
). Robust growth in the 1980s was driven by high public investment financed by official assistance, preferential access for traditional exports, and the emerging tourism sector. In the 1990s, official assistance began to dry up, preferential access to markets started to erode, and the high initial growth spurt in tourism abated. With the slowdown of growth, ECCUgovernments responded by increasing public investments—financed by accessing external capital markets and tapping the fast-growing domestic financial sector—yet with disappointing growth outcomes.
20. The ECCUgovernments had access to foreign financing even when other emerging market countries faced a turnaround of net capital inflows ( Figure IV.4 ). Also, unlike other developing countries, where capital flows are usually procyclical, non-FDI capital inflows continued to the ECCU countries even during periods of low economic activity. 15 Possible reasons for their ability to borrow externally could be their good repayment record, relatively low GDP volatility, the perception that the ECCB would serve as a lender of last resort in the event of