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

Grenada's economy experienced strong growth through end-June 2024, driven by tourism, moderating inflation, and a narrowing current account deficit. A surge in Citizenship-by-Investment (CBI) revenue improved the fiscal position and reduced public debt. However, Hurricane Beryl caused damages exceeding 16% of GDP in affected areas, prompting the government to suspend fiscal rules and implement recovery measures. Near-term growth is projected to remain resilient at 3.9% in 2025, supported by limited hurricane damages and reconstruction spending. Sizable government savings and triggered disaster-contingent instruments provide fiscal space for these spending needs. Over the medium term, GDP growth is expected to slow as the tourism sector nears peak capacity. Key risks include further natural disasters, potential tourism demand shocks, and uncertain CBI inflows. The domestic non-bank financial system faces rising vulnerabilities from credit unions and rising property insurance costs. Prospective hotel developments and public investment projects represent upside risks. The staff report recommends continued budget prudence, improved public investment management, strengthened oversight of the non-bank financial system, and sustained structural reforms to boost long-term growth and enhance resilience. The next Article IV consultation is expected to be held on the standard 12-month cycle.