Annual Report 2015
25
We are very pleased to welcome the staff of HFC Bank (Ghana)
Limited and Republic Bank (Suriname) N.V. to the Republic Bank
family.
Global
Across the globe, economic growth for 2015 has fallen short of
expectations. Based on developments over the first six months,
with the exception of Italy, Spain and Russia, the growth forecasts
for all other large countries and regions were either held constant
or revised downward by the International Monetary Fund (IMF).
Commodity prices continued to trend downward during the third
quarter, with food prices declining to the lowest levels recorded in
almost seven years. Despite a minor second quarter rally, oil prices
continued to decline, with third quarter West Texas Intermediate
(WTI) prices averaging US$46.42 per barrel.
These developments do not allow for an optimistic view on global
growth prospects and the IMF has projected growth of 3.1%
for 2015 and 3.6% in 2016. Economic expansion in developing
countries is expected to moderate even further due to protracted
low commodity prices and reduced investment flows triggered by
expected increases in United States interest rates.
TrinidadandTobago
Following a contraction of 1% in the domestic economy in 2014,
minimal growth of 0.2% is estimated for 2015. This performance
was largely based on the positive performance of the non-energy
sector which offset the contraction in the energy sector. The non-
energy sector expanded by 2.3% in 2015, up from 0.1% in 2014
due to increased activity in the manufacturing (from -4% to 1.3%)
and services (from 0.7 % to 2.5%) sectors. The energy sector was
affected by weak global oil and gas prices and low output and is
estimated to contract by 3.4% in 2015.
In September 2015, the Monetary Policy Committee of the Central
Bank of Trinidad and Tobago increased the ‘Repo’ rate for the
seventh consecutive time by 25 basis points to 4.5%. This decision
was based primarily on the forward guidance by the Federal Reserve
to raise United States policy rates. However, the Federal Reserve
continued to delay its increase in rates because of the slowdown
of the Chinese economy and heightened uncertainty surrounding
the global economy. The United States economy continues to show
signs of strengthening and it is expected that rates will be increased
by 2016.
Going forward, weak energy prices are expected to persist and
increasing reliance will be placed on the non-energy sector to fuel
growth.
Barbados
With stronger growth in the tourism sector in 2015, the domestic
economy has performed slightly better than a year ago. The latest
available data indicates that economic activity expanded by 0.3%
percent during the first nine months of 2015, compared to a decline
of 0.1% during the same period in 2014. For the full year 2015, the
domestic economy is anticipated to grow by 0.5%, up marginally
from 0.2% in the previous year.
The marginal improvement in economic activity during the first nine
months of the year resulted in a decrease in the rate of unemployment
to 12% from 12.4%. The substantial fall in commodity prices,
(particularly fuel prices) helped to reduce Barbados’ import bill and
caused inflation to fall to 0.8% from 1.7% in September 2014.
During the 2014/2015 fiscal year, the country’s fiscal deficit fell
significantly to 6.9% of GDP, from 11%. This improvement was
linked to continued efforts by the government to bring its fiscal
accounts to more sustainable levels. Debt to GDP remains high at
108.6%.
The growth was largely based on the impetus provided by the
tourism sector which expanded by 6.3% during the first nine
months of 2015. The sector experienced 14.5% growth in
arrivals, with visitors from its largest market, the United Kingdom,
increasing by 13.2%. The increased tourist arrivals, however, did
not result in an increase in the country’s foreign reserves which fell
to US$488.35 million (14.4 weeks import cover) in September 2015
from US$532.7 million in September 2014.
The Central Bank of Barbados expects the economy to expand
by 1% in 2016 on the basis of continued growth in the tourism
sector. Some impetus is also expected from construction with
the implementation of private and government projects. With
commodity prices predicted to remain low during the year, the
country is not expected to face significant inflationary pressures.
Tight fiscal policy is expected to produce a further decline in the
fiscal deficit but this could impact growth.
Ghana
Ghana’s three main exports – crude oil, gold and cocoa – endured
steady price declines over the period October to December 2014.
