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Dimitre Milkov, Mr. Rafael A Portillo, Mr. Plamen K Iossifov, and Mr. John Wakeman-Linn

directly affected. A decline in foreign direct investment, a sharp fall in domestic credit, or a contraction in the production of commodities that are labor intensive, such as timber—due to the overall decline in global demand—could all contribute to an increase in unemployment and a contraction in growth. 13. While the impact of the crisis on region-wide inflation will depend on a number of factors, there could be disinflationary pressures in 2009, stemming largely from easing food and fuel price pressures . Recent work has highlighted the role of CEMAC non

International Monetary Fund. Western Hemisphere Dept.
This 2019 Article IV Consultation explains that St. Lucia’s near-term growth prospects are favorable, supported by large infrastructure investment and robust tourist inflows. However, longer-term growth continues to be impeded by high public debt, lingering vulnerabilities in the financial system, and structural impediments to private investment. Diminishing policy buffers further weaken the country’s resilience to external shocks against the backdrop of aprecarious global outlook. Completion of long pending legislative initiatives, alongside stronger regional and domestic financial oversight, should provide banks with incentives to strengthen their balance sheets and increase the efficiency of financial intermediation. There is also a need to draw on supervisory and regulatory tools to respond to emerging risks from rising overseas investments of the banks and the rapid expansion of lending by credit unions. The authorities are recommended to should step up efforts to address the institutional, financing and capacity gaps in its climate and disaster response strategy. Supply-side reforms are needed to unlock potential growth by improving the business environment, reducing energy costs, enhancing labor productivity, and further diversifying the economy.
International Monetary Fund. Western Hemisphere Dept.

improvement in the current account. Unemployment has declined somewhat but remains high at 18 percent while inflation remained subdued as fuel price pressures subsided. Prudent fiscal policies and revenues from the citizenship-by-investment program (CIP) have helped stabilizing public debt as a share of GDP. The primary fiscal surplus rose to 2.1 percent of GDP in 2018 and is projected to be broadly balanced in 2019 due to a decline in CIP applications and increased public sector wages. Bank credit to the private sector shrank for a sixth consecutive year, reflecting more

International Monetary Fund

. Monetary and financial sector policies The monetary authorities responded well to the contraction in economic activity, and the Central Bank has taken crucial measures to bring down inflation levels. However, inflation in recent months was boosted by the first-round effects of the last July’s VAT rate increase, and continued food and fuel prices pressures. The Central Bank has paused its monetary policy easing and believes that further vigilance is needed to keep inflation expectations contained and stave off possible second-round inflationary effects from risks

International Monetary Fund. Asia and Pacific Dept

/y) in May 2012—reflecting lower food and fuel price pressures, policy tightening, and favorable base effects. The fiscal deficit declined further in 2011 to reach the pre-global financial crisis average. Credit growth, however, has again picked up to over 40 percent (y/y) in the first four months of 2012, reversing positive progress towards maintaining financial stability in 2011. The current account deficit has widened and gross international reserves declined by US$50 million to US$677 million at end-2011, covering about two months of prospective nonresource imports

International Monetary Fund

-round effects of last July’s VAT rate increase, and continued food and fuel price pressures. Moreover, further expected hikes in administered prices will make it difficult to meet the Central Bank’s 2011 inflation target. We expect inflation to peak at 8.5 percent in mid-year, before gradually declining to slightly above 5 percent by the end of the year. The authorities will shift monetary policy to a tightening bias and take action as needed to ensure the 2012 inflation target is met. The Central Bank will continue to improve liquidity management, and will remain alert to

Mr. Thomas Helbling, Ms. Valerie A Mercer-Blackman, and Mr. Kevin C Cheng

acute in the case of oil, where capacity growth in response to persistently higher prices has been disappointing in recent years (see Chart 3 ). And, as the pessimistic prospects for capacity growth have seemed more certain, these expectations have further fueled price pressures. This was particularly the case in 2007. Key handicaps have been the declining average size of fields and the technological challenges involved in the increasing reliance on exploiting nonconventional fields (for example, deep sea fields or oil sands). These supply rigidities, together with