A REPRINT WITH A RESPONSE
Written by Peter Gernert on February 20, 2018
GRENADA’S GROWTH RATE OF 4% PUT INTO PERSPECTIVE
The ruling New National Party NNP has been campaigning on the result of an economic rebound which is being referred to as a GDP Growth Rate of 4%.
Looking at publicised figures (e.g. IMF Country Report No. 17/131 Grenada Sixth Review … May 2017) we see Real GDP in 2015 of 6.2%, 2016 of 3.9%, and 2017 of 2.5%.
The three year average is 4.2%. Apparently, they took the 2016 value of 3.9% and rounded it off to 4%. More appropriate would have been to use the latest value for 2017 of 2.5%.
These isolated values, albeit important, tell us little if not compared to the performance of comparable countries. The recently published Inclusive Development Index 2018 Report from the World Economic Forum (WEF) is very helpful. See the following link: http://reports.weforum.org/the-inclusive-development-index-2018/results-and-key-findings/
The GDP Growth Rates are displayed by Income Group: Advanced, Upper Middle Income, Lower Middle Income and Low Income. The calculation expands over a five year period from 2012 to 2016. The input is compiled from the World Bank and World Economic Forum data and includes nations worldwide. The values for GDP growth are:
Upper Middle Income 7.04%
Lower Middle Income 8.54%
Low Income 6.08%
Grenada ranks 62nd of the country list by income, and falls into the Upper Middle Income Category (Wikipedia 2016 list).
Grenada’s values for the same period 2012 to 2016 are 2012: -1.2%, 2013: 2.4%, 2014: 7.3%, 2015: 6.2%, 2016: 3.9% (IMF Country Reports 15/333 and 16/389). The average is 3.72%.
Grenada’s economic performance of 3.72% should be compared to the rest of the world in this category with a GDP growth of 7.04%. This would mean that Grenada achieved only 52% of the performance of all comparable countries.
By analysing these statistics over a period of many years, it becomes apparent that forecast figures predict pretty precise future development. We must therefore take the projection very seriously. The IMF’s assessment for future Real GDP Growth in Grenada are 2018: 2.7%, 2019: 2.7%, 2020: 2.7%, 2012: 2.7%.
These low numbers are frustrating. The world’s economy is booming, and continued under-performance of the ruling NNP would leave us again at the tail end of economic development. Mismanagement and corruption lead to wrong priorities and wrong decisions. A decline in agriculture and many failed projects like Mount Hartman are just two examples. A change is necessary! We need honest and competent leaders!!!
The low and disappointing performance of the ruling NNP has caused even more consequences. Our place in the World Bank’s Ease of Doing Business Ranking in 2018 is 142nd, in the bottom third of 190 countries. All other Caribbean Islands are better or significantly better rated. For example, St. Lucia in the first half, ranked 91st.
The Transparency International Corruption Perception Index is an important indicator for business people. Grenada ranks lower than Barbados, St. Lucia, St. Vincent and the Grenadines and Dominica.
Shocking is the financial rating of Standard and Poor’s. The rating list covers 198 countries. Grenada has the lowest rating of then all: SD “Has selectively defaulted on some obligations,” Outlook negative. Source: http://www.Wikirating.org
In summary, the 4% GDP growth rate is only 52% of what comparable countries achieve. The bad or very bad results in rankings of reputable organisations are poison for our economy. This is the reality.
Neither the Budget Speech nor any other action of the Government give hope to come out of this trough. More of the same is not an option. The NDC has a well-documented vision for real growth of the economy (see www.ndcgrenada.org/vision). The strategy is coherent and it is doable. It plans for a diversified economy and has defined priorities. The building blocks are feasible. The team is composed of experienced leaders. And last, but not least, they all have impeccable reputations of honesty and good character – which is exactly what we need.
ERROL CHARLES ASKED ON FEBRUARY 18, 2018 AT 12:24 PM
Mr. Peter Gernert, could you please give us a comparable analysis for the years 2008 to 2012 so that this whole scenario can be put into context. Thank you.
PETER GERNERT RESPONDED ON FEBRUARY 19, 2018 AT 04:09 PM
You have asked for a comparison for the period 2008 to 2012. There is no report from the World Economic Forum (WEF) to allow the exact same procedure for the desired period.
It can however, be stated, that the GDP growth for those years has been negative like in the rest of the world. The Financial Crises, starting 2007/2008 was the most severe since 1929 and hit the world hard and unprepared. The remarkable achievement of the then government was to quickly stop the downward trend, and bring the country back to positive growth by 2013. (2.4%).
Historic data is available for the Ease of Doing Business Index. Grenada was 70 in 2008 and 73 in 2012 which is stable.
The following years under the present Administration are different: Year 2013, 100; Year 2014, 107; Year 2015, 126; Year 2016, 135; Year 2017, 138; and Year 2018, 142!!!!
Standard and Poor’s credit rating for Grenada was CCC+ long term outlook Negative end of 2012.
I noted in my article that a GDP Growth Rate of 4% is advertised by the NNP in their campaign ads, although the 2017 growth rate was lower at around 2.5%. The ads have now been changed to 5%. I leave this for everybody’s own judgement.
Most important is the projection for the future. I recommend reading again the last chapter of my initial letter.