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Haiti - Economy : Increase in inflation and growth slowdown... 17/07/2015 10:36:59
The Bank of the Republic of Haiti, indicates that the internal plan, the data estimated of economic indicators for the third quarter 2015 [Data IHSI are not yet available, the BRH has made an estimate of the economic indicators for the second quarter 2015, based on an extension of trend] indicate a slight recovery in economic activity in the industrial and commercial sectors from the previous quarter. Indeed, after having decreased 7.5% and 8% respectively in the second quarter 2015, driven by a deterioration of the business climate due to the socio-political situation, the projections of the Index Industrial Production and that of the Commercial activity should have displayed a positive growth in the third quarter. The revival of these branches can be explained by the increase in production at the agro-food manufacturing companies, beverages and tobacco, textiles, wood products and printing paper. Similarly, the resumption of work at the public works helped revive the activity of the construction sector (IAC), which recorded a contraction of 3.8% in the second quarter 2015. By cons, in the agriculture sector, the projections of the National Coordination for Food Security (CNSA) report a reduction in agricultural production expected for the months of June and July (spring harvest) because of low rainfall and a lack of investments in this sector. This situation has fostered a slight increase in prices in the third quarter 2015. 6.4% in March 2015, the annual inflation rate rose to 6.6% in May 2015. Similarly, in monthly variation, the pace of price growth reached 0.8% in May 2015 against 0.3% in March 2015. This acceleration of consumer prices, though weak is also associated with monetary growth which promoted significant exchange rate increases , which led to higher prices for imported food products that have a weight of 38.1% in total products consumed. Perspectives : The prospects for the Haitian economy augurs a trend of rising inflation and slowing economic growth that might be lower than the growth rate of 2.5% set in the amending budget for fiscal year 2014- 2015. The negative impacts of drought on agricultural production combined with the business climate disturbed by the socio-political situation and the resulting uncertainties, should affect growth. Price stability in our two major trading partners, the downward trend in the prices of commodities in the international market could still mitigate the negative effects of the depreciation of the gourde [56 gourdes for US $ 1] and the decline in agricultural production. Inflation forecasts assume a stable price growth to 6.7%, 6.8% and 6.9% yoy respectively for the months of June, July and August 2015. Similarly, the improvement of global economic activity, particularly in the United States should support the increase of private unrequited transfers, which constitute the largest component of the country's currency supply. Locally, the tax measures included in the amending budget, characterized by recovery and/or tariff reduction on some products aimed at medium term, a reduction in imports of these goods and the increase in their production domestically. The materialization of external budgetary support, estimated at about $65 million, is expected to induce an improvement in the fiscal balance and a reduction of monetary financing, which, combined with the expected foreign currency inflows for the summer season [visitors from the diaspora and tourists in the Carifiesta] imply an improved dollar offer and more favorable conditions in the foreign exchange market. In this particular context, the posture of the BRH will always aim a minimization of the impact of excess liquidity on the demand for currency in the economy in order to pursue its ultimate objectives of price stability, given the high level of transmission of depreciation to inflation. The loss of purchasing power resulting from the depreciation of the national currency was contained by the opposite movement of international prices of the main products that import Haiti. However, it is important to remember that their future evolution will depend on the international economic uncertainties hence the urgent need to pursue public policy efforts to improve the competitiveness of local production chains. Note that at the level of the Dominican economy, growth of 6.5% was recorded from January to March 2015, due to increased activity in all sectors of the construction (14.9 %), trade (10.6%), financial intermediation (7.4%), agriculture (5.8%), and hotels, bars and restaurants (4.9%). These sectors have contributedfor 76% of this growth. The slowdown in inflation observed since January continued until April 2015. Headquartered to 1.16%, 1.02% and 0.64% respectively in January, February and March 2015, annual inflation reached -0.04 and 0.23% in April and May. Given the evolution of the general price level and the performance of macroeconomic indicators, the Dominican Central Bank lowered the key interest rate twice, to 5.25% in April and 5% in May 2015. HL/ HaitiLibre (source BRH)
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