Haiti - Note from the BRH : Towards a 4th year of negative growth (4th quarter 2021-2022) - HaitiLibre.com : Haiti news 7/7

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Haiti - Note from the BRH : Towards a 4th year of negative growth (4th quarter 2021-2022)
25/11/2022 09:25:15

Haiti - Note from the BRH : Towards a 4th year of negative growth (4th quarter 2021-2022)
The 4th quarter of the 2021-2022 fiscal year (July to September 2022) was characterized by a deterioration of the macroeconomic framework due to the negative shocks recorded during the previous quarters and the volatility of the external and internal situation, thus reinforcing the prospects of a 4th year of negative growth for the Haitian economy, underlines the Bank of the Republic of Haiti (BRH).

Excerpts from the BRH's 4th quarter note :

"[...] The stalemate of the socio-political and security crisis has had a negative impact on economic activity and has resulted in a weakening of supply as well as an acceleration of inflation. The social disruptions recorded during the month of September 2022 caused significant material damage to the entrepreneurial ecosystem. At the same time, the high level of petroleum product prices on the international market despite their downward trend and the prolonged unavailability of the latter at the national level were reflected in the cost structure of companies through the increase in the cost of other inputs

[...] This situation, which characterized the economy in the 4th quarter, had several consequences, including an amplification of inflationary pressures, loss of formal jobs, particularly in the commercial sector and the textile industry, as well as an increase in the food insecurity. Indeed, year-on-year, the inflation rate accelerated by 150 basis points to 30.5% in July 2022 https://www.haitilibre.com/en/news-37586-haiti-flash-inflation-breaks-records-and-crosses-the-30-mark.html , reflecting in particular the marked increase in the prices of imported products (+43.2% against 23.2% for the prices of local products) .

[...] The figures available on foreign trade show a deterioration in the trade balance over the first eleven months of the 2022 financial year and a 5.5% drop in private transfers without counterpart (diaspora).

[...] in the 4th quarter, a 3% depreciation of the Gourde was recorded. Net foreign exchange reserves stood at $227.23 million as of September 30, 2022, down 6.14% from the previous quarter. Despite this decline, gross reserves continue to evolve above the threshold of three months of imports.

[...] Over the financial year, the revenue collected could not reach the levels forecast in the budget, marking a poor performance of 8.3% compared to the budgetary target / For their part, budgetary expenditure increased by 7.8% compared to 2021 despite measures to rationalize the latter through the cancellation of most exemptions and the termination of some subsidy programs.

[...] Despite growth of 13.5% year-on-year supported, in part, by inflation and the increase in the exchange rate, revenue collected over the year represented only 37.5% of totals of the State resources.

The short-term outlook for the Haitian economy will depend on a set of factors including the evolution of the security and socio-political situation, the availability of petroleum products and the decline in inflation in the main trading partners. At the internal level, the alleviation of socio-political unrest and the improvement of security conditions will allow for better functioning of economic activity. Overall, this should have positive effects on the confidence of economic agents, a "sine qua non" condition for restoring a business climate conducive to investment and private initiatives [...] On the external level, the slowdown the pace of inflation growth among Haiti's trading partners should help reduce the country's import bill and limit inflationary pressures from imported products. At the same time, disinflation combined with a more pronounced growth of these economies is a source of improvement in the disposable income of Haitian migrants and consequently, private transfers without counterpart [...]"

The non-materialization of these and other aspects would be accompanied by the continued decline in economic activity, the amplification of inflationary pressures and tensions on the foreign exchange market. [...]

Download the complete note from the BRH (French PDF) : https://www.haitilibre.com/docs/Note-de-Politique-Monetaire-4eme-trim-2022_FINAL.pdf

HL/ HaitiLibre

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