GRENADA’S GROWTH RATE OF 4% PUT INTO PERSPECTIVE
Written by Peter Gernert on February 17, 2018
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.