CATEGORY:GOVERNMENT
--------------------------

(An NNP -New National Party- perspective)


A LOOK AT WHAT IS HAPPENING IN THE WORLD AROUND US:
---------------------------------------------------
The IMF indicates that real world GDP is expected to grow at around 5 percent in 2006. International trade continues to be a major factor driving sustained world growth. The United States continues to be the major engine of world growth and looks set to grow by 3.4 percent. Great Britain, one of Grenada’s major trading partners, is set to record positive growth of 2.5 percent.

Notwithstanding weaker domestic demand, there are signs of a sustained recovery in the Euro area with growth projections of 2.0 percent in 2006. In the emerging Asian markets, GDP growth in both China and India are expected to be very strong driven by domestic demand as well as a rapidly rising current-account surplus in the case of China. Growth is also expected to be strong in the Middle East, Latin America and Africa. There are promising signs of accelerating growth in Western Europe and in Japan. The recovery appears to be firmly entrenched.

Inflation is expected to remain with the high fuel prices, experienced globally, for most of 2006.

According to ECLAC, the Caribbean sub-region is forecasted to grow by approximately 5.9 percent mainly on the back of Trinidad & Tobago’s growth of 10.0 percent deriving from natural gas exploration and processing as well as Jamaica, relative to normalization of activities in mining and agriculture. According to data from the Central Bank of Barbados, the Barbadian Dollar is expected to grow between 4.0 – 4.5 percent. In a number of other countries, the growth is predicated on investment in the 2007 Cricket World Cup event.

The high growth in the world economy as well as regional developments are expected to impact positively on economic developments in Grenada through increased earnings of foreign exchange arising from tourism, foreign direct-investments and remittances.

GRENADA'S EXPECTED ECONOMIC PERFORMANCE:
---------------------------------------------------
The outlook for the Grenadian economy in 2006 is favourable as preliminary data for the first six months of the year suggest that the economy will record positive growth of 1.4 percent. This growth is predicated on ongoing reconstruction activities, a modest recovery in the agricultural and tourism sectors, and activities surrounding the preparations for Cricket World Cup 2007. However, it should be noted that the growth prospect for this year has been negatively affected by the shortage in construction materials (cement) during the early part of this year.

The 2006 expected performance, however, has to be viewed in the context of a very strong recovery of 12.1 percent in 2005, which came on the heels of a significant decline – in excess of 6.0 percent in the previous year. Inflation (percent change, end of period) is expected to be 2.0 percent this year barring any further increases in the price of basic inputs such as fuel.