Haiti – Economy : Mixed Haitian economic outlook
In its note on monetary policy (2nd quarter of fiscal year 2021-2022 (January to March 2022), the Bank of the Republic of Haiti (BRH) generally explains that « The second quarter of the fiscal year 2021-2022 was marked, on the international level, by the amplification of inflationary tensions, the accentuation of uncertainties around the outlook for the world economy due to the conflict in Eastern Europe [Russie / Urkraine] »
Excerpt from the BRH note:
» […] At the national level, the increase in commodity prices has increased the import bill. Added to this is the continued uncertainty surrounding the business climate, delaying the resumption of economic activity, which suffered from the poor performance of the autumn agricultural campaign and the deterioration of security conditions. These shocks, both internal and external, have generated tensions in the foreign exchange market and fueled the inflationary pressures that are beginning to be reflected in wage revisions in various sectors.
[…] The high prices of inputs (especially imported ones) and the persistence of market supply problems linked to the deterioration of security conditions have greatly affected the productivity of local businesses, especially the performance of the primary sector.
[…] As a result, an acceleration in the rate of increase in the general level of prices was observed during the second quarter, both on a year-on-year basis and on a monthly basis. The annual inflation rate fell from 24.6% in December 2021 to 25.9% in March 2022 https://www.haitilibre.com/en/news-36701-haiti-economy-inflation-on-the-threshold- des-26-en-rise.html [NHL : 26,7% en avril https://www.haitilibre.com/article-36842-haiti-economie-inflation-en-forte-hausse-26-7-plus-haut-depuis-19-ans.html ]
[…] Regarding the trade balance, in the first five months of fiscal year 2022, exports reached a value of US$472.24 million, while imports grew by 7.3% to amount to US$1.932 million. This change in foreign trade led to a deterioration in the trade balance of 4.2%.
[…] As of March 31, 2022, the Public Treasury has used resources totaling 143,378.6 MG represented by tax revenue up to 40% and proceeds from the issuance of commercial paper accounting for 60%. In net terms, the situation of expenses and resources of the Public Treasury showed a deficit financed mainly by the Central Bank to the tune of 15,844.2 MG. Over the year, financing from other sources was estimated at 686.8 million gourdes, including 354.8 million from the issuance of treasury certificates. The outstanding amount of these securities reached 42,685 MG.
[…] In addition, private unrequited transfers totaled US$832.8 million in the second quarter, marking a decline of -9.6% compared to the previous quarter and -5.1% compared to the same period. of last year.
In the short term, the outlook for the Haitian economy remains mixed. Economic activity could benefit from the improvement in agricultural production, since according to the CNSA, the current rains are favorable for spring crops. However, the lack of access to inputs risks compromising the performance of the sector. Similarly, remittances should increase seasonally, which would be conducive to increased consumption by Haitian households with positive effects in terms of strengthening economic activity. In terms of public finances, the inclusion in the budget of investment projects likely to stimulate private initiatives could contribute to the revival of activity. At the same time, maintaining measures to rationalize public spending should help contain the public deficit and consequently reduce recourse to monetary financing.
However, among the exogenous factors likely to have a negative influence on the behavior of inflation, it is necessary to consider in particular the negative expectations linked to the continued deterioration of security conditions and the potential repercussions on the international prices of commodities from the continuation of the war in Ukraine, not to mention the economic and financial sanctions against Russia. Such a situation risks aggravating the rise in the import bill and, consequently, fueling tensions on the foreign exchange market and inflationary pressures. The resulting depreciation of the national currency would have negative implications for prices in the economy. »
Download the note in full from the BRH (PDF 14 pages in French): https://www.haitilibre.com/docs/Note-de-Politique-Monetaire-2e-trim-2022.pdf