INTERNATIONAL Monetary Fund (IMF) says St Vincent and the Grenadines’ economy rebounded strongly last year and has now surpassed the pre-pandemic level. Growth is also expected to continue this year, though at a slower rate.

The Washington-based financial institution said in 2022-23 the economy rebounded strongly from the pandemic and 2021 volcanic eruptions, returning to pre-pandemic output levels. It said growth reached 3.1 per cent in 2022 and is estimated to have accelerated to 5.8 per cent in 2023.

It pointed out that the growth was supported by large public and private investment and a robust recovery of tourism, which were enough to outweigh a drop in agriculture due to lingering effects from volcanic eruptions and the historic high temperature in 2023. It also said employment has returned to the pre-pandemic level except, however, for young men, and that female labour force participation remains relatively low.

Still it noted that, “The outlook is favourable — supported by continued recovery in tourism and strong investment in infrastructure — but is subject to downside risks mainly stemming from an abrupt global slowdown, commodity price volatility, and potential delays in investment projects.”

It said the country’s economy is also facing significant challenges from a rapidly ageing population and the intensifying threat of natural disasters and climate change, amid the still-high public debt. The fund’s executive director said fiscal policy should focus on building buffers and supporting resilience and inclusive growth, while safeguarding public debt sustainability.

Yet, it forecasts growth at 4.9 per cent in 2024, supported by continued growth in tourism and strong investment on infrastructure, particularly the port project. Inflation is projected to ease to 2.5 per cent by end-2024, on account of lower imported inflation.