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Haiti - Economy : Note from the BRH on economic activity (2nd quarter 2018-2019)
17/04/2019 09:50:37

Haiti - Economy : Note from the BRH on economic activity (2nd quarter 2018-2019)
In its note on economic activity in the second fiscal quarter of 2018-2019, the Bank of the Republic of Haiti (BRH) emphasizes that at the level of the national economy "[...] economic activity has been severely affected by the socio-political unrest of February 2019. The impact was strongly felt in the tertiary sector, with a particularly pronounced effect on tourism and hotels. This is how several airlines have significantly reduced the number of flights to Haiti. At the same time, a survey conducted by BRH's Currency and Economic Analysis Department at 23 of the country's top hotels indicates that 64% of bookings for the month of February 2019 have been canceled. [...]"

For the secondary sector, BRH saw a slight increase in activity in the assembly sector in January. But notes that the suspension of activities in early February has resulted in the non-compliance of many delivery contracts while a factory in the Caracol Industrial Park has temporarily suspended its investment projects https://www.haitilibre.com/en/news-27347-haiti-flash-koreans-in-caracol-transfer-their-extension-projects-in-dr.html

Regarding the agricultural sector, the information provided by the "Fews Net" network for the month of February 2019, indicate that several communes in the departments of the West, North, North-East, North-West, Central and Nippes are struggling with drought. This situation should affect the availability of the local food supply with potential adverse effects on food prices in the coming months. In addition, the BRH reminds that

With regard to consumer prices, the BRH mentions that "[...] inflationary pressures intensified during the months of January 2019 and February 2019. The reduction in the supply of a large number of products mentioned above contributed significantly. At the same time, this situation can also be explained by the rise in monetary financing in December and January, with its consequences in terms of the depreciation of the national currency and an increase in aggregate demand. Thus, annual inflation (base 100 in 2017-2018) was 17% in February https://www.haitilibre.com/en/news-27278-haiti-economy-new-record-inflation-accelerates-and-reaches-17-in-february-2019.html against 15.10% in December https://www.haitilibre.com/en/news-26810-haiti-economy-inflation-crosses-the-bar-of-15.html [...] the exchange rate pressures continued : on March 26, 2019, the benchmark rate was 82.65 gourdes for one US dollar, an increase of 7.07% compared to December 31 2018.

[...] At the level of the public finances, the situation is characterized by a fall of the receipts related in particular to the slowing down of the economic activities following the socio-political troubles of the month of February. At the same time, public spending was contained in accordance with the provisions of the Economic and Financial Governance Pact https://www.haitilibre.com/en/news-26844-haiti-flash-the-state-signs-a-new-pact-of-economic-governance-with-the-brh.html [...] "

The forecasts made by the Currency and Economic Analysis Department for the next three months are based on a downward trend in monthly inflation, while year-on-year inflation should continue to rise "[...] on a monthly basis, the inflation rate should be 1.3% in March before stabilizing at + 1.1% for the months of April and May. At an annual rate, the inflation rate should reach 17.5% in March, and 17.6% for the months of April and May 2019 [...]"

Among exogenous factors that can influence inflation, BRH cites the impact of drought on local food supply and the potential impact on international prices as floods have affected the US Midwest. Stressing that inflation could also be affected by the rise in world oil prices observed in recent weeks, due to the deterioration of the political situation in Venezuela and the tightening of US sanctions against Iran.

"[...] Moreover, the uncertainties that still weigh on the business climate following the events of February and the expectation of the ratification of a new government could fuel negative expectations. Similarly, the vagaries of setting the minimum wage could affect business and investment, particularly in the export-oriented sub-contracting sector.

However, strict adherence to the Economic and Financial Governance Pact aimed at contain public spending within the limits of state resources could facilitate a reduction in monetary financing..."

Download the complete BRH report for the 2nd fiscal quarter 2018-2019 (PDF) : https://www.haitilibre.com/docs/note_polmon2t19.pdf

The Note on Monetary Policy of the Bank of the Republic of Haiti (BRH) analyzes recent developments in the Haitian economy. Its purpose is to provide information on the direction of monetary policy and the latest decisions taken by the authorities to identify short-term prospects for the national economy.

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