A recovery is underway in Grenada, but output remains below a full recovery from the pandemic. Economic activity accelerated in 2022, building on the progress made a year earlier, although output in key sectors including tourism remains below pre-pandemic levels. Fiscal measures helped to anchor the recovery and supported households amid rising food and fuel prices. Although public expenditures grew, spending was outpaced by revenues collected and fiscal balances improved. Consequently, the public debt-to-gross domestic product (GDP) ratio trended downward. Bank capitalisation positions remained strong, above the required prudential ratios. The external current account deficit worsened as export growth slowed and imports surged.

The 2023 outlook remains cautiously positive driven mainly by public sector construction activity and strong tourism inflows. Risks to the outlook are associated with further upward pressures on prices linked to the impact of the Russia/Ukraine war, a global economic slowdown, and
vulnerability to climate-related shocks.