The seventy-first Meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB) was held on 21 October 2011, under the chairmanship of the Honourable Reuben Meade, Premier and Minister for Finance, Montserrat.

Council extended congratulations to the Chairman on being sworn in as the first Premier of Montserrat with the country’s adoption of a new constitution on 27 September 2011.

Council received the Governor’s Report on Monetary and Credit Conditions in accordance with Article 7(2) of the Eastern Caribbean Central Bank Agreement 1983. The report outlined monetary and credit conditions in the ECCU over the quarter ended June 2011 against the backdrop of global economic and financial developments and provided an outlook for the near to medium term.

Council noted that the macroeconomic and financial conditions of the ECCU continue to be greatly challenged by the adverse global financial and economic situation which has resulted in two consecutive years of negative growth – 2009 and 2010. Following a 0.2 per cent contraction in the first quarter of 2011, available data suggest that economic activity picked up somewhat in the second quarter. Growth was largely driven by a 6.5 per cent increase in tourist arrivals in the second quarter relative to the number recorded in the second quarter of 2010. In addition, a recorded increase in imports of building and construction materials, coupled with an increase in commercial bank credit for home construction and renovation, suggests that construction activity was at a higher level relative to the second quarter of the previous year.

Council further noted that, with the advanced economies continuing to perform below expectations, challenged by fiscal stresses, financial sector instability and pessimistic consumers, the near-term macroeconomic and financial outlook for the ECCU area remains highly uncertain, with significant downside risks. Moreover, elevated unemployment rates and weak payroll growth in the advanced economies will restrict growth in tourism, a major export sector in the ECCU. Accordingly, the growth outlook for the ECCU has been revised downwards, with real growth for 2011 now projected at 0.4 per cent.

This is an extract of the Communique, to read the full version, please click this link. Communique_71st_Council_Meeting_(21_Oct_2011_in_St_Kitts)

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