Grenada: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada

The 2024 Article IV Consultation highlights that through end-June 2024, Grenada’s economy was experiencing sustained strong growth supported by buoyant tourism, moderating inflation, and a narrowing current account deficit. The authorities responded swiftly with a package of fiscal measures, including suspension of fiscal rules to permit temporary deficit spending in support of the recovery and reconstruction. Grenada’s near-term economic growth is projected to remain resilient at 3.9 percent in 2025, buoyed by limited hurricane damages to tourism infrastructure and the authorities’ large recovery and reconstruction spending. Sizable government savings and triggering of disaster-contingent instruments create fiscal space for these spending needs. Over the medium-term gross domestic product growth is projected to slow given the tourism sector operates near its peak-season capacity. Key downside risks include the threat of further natural disasters, potential shocks to tourism demand, and the uncertain scale of future Citizenship-by-Investment inflows, while the domestic non-bank financial system faces rising vulnerabilities from the continued rapid expansion of credit unions and the rising costs of property insurance. Prospective hotel developments and public investment projects represent upside risks to the medium-term growth outlook.