Economic Outlook published

17 June 2011

The Council of Ministers has asked the States Economics Unit to release regular inflation forecasts as part of its Economic Outlook report. The first of these forecasts is now published and will be released quarterly from now on. Ministers hope that this will help inform Islanders about cyclical developments in the local economy.

The Deputy Chief Minister, Senator Philip Ozouf, said “As this is the first time we have asked the Economics Unit to include inflation forecasts in its Economic Outlook, we have asked for a more detailed note on the current inflation outlook to accompany the figures.

"From now on this information will be published quarterly, to allow Islanders to view movements within the economic cycle and to see how internal and external factors can affect the inflation rate.

Return to growth

“It is encouraging that the Economics Unit continues to forecast a return to growth this year and next. Its report notes several positive recent developments in the local economy, particularly rising activity and optimism in the financial services industry.

“I am confident that we can take the right steps to support this emerging recovery. Our new Economic Growth Strategy is due to be published at the end of this month, and it will ensure future growth is based on improved productivity, by focusing on developing the skills of local people and by encouraging enterprise.

Temporary effect

“It is important to understand that while the 2% rise in GST will add approximately 1.5% to the headline inflation rate for 12 months, this is temporary. As it is taking money out of the economy, it does not add to the underlying inflation rate. It would only add to underlying inflation if it were to be reflected in wage increases.

“The GST increase is an essential element of the States’ agreed strategy to close the structural deficit by 2013. It allows the economy time to recover and provides the stability critical for economic growth.”

The Economic Outlook and inflation forecast will be published quarterly. The remaining 2011 publication dates will be during the weeks commencing 5 September and 28 November.