Not much growth expected in the Caribbean this year
CDB President Dr Warren Smith cautions that growth rates were way too low and public debts were still spiraling out of control.
BRIDGETOWN – Caribbean economies are projected to record minimal growth – an average of 1.7 per cent this year. But’s that not enough to generate jobs and drive desperately needed debt reduction, the Caribbean Development Bank (CDB) has warned.
At the CDB’s annual news conference detailing the economic performance and outlook for its borrowing member countries (BMCs), president Dr Warren Smith cautioned that growth rates were way too low and public debts were still spiraling out of control.
Describing the overall performance as “fragile and uneven”, Smith raised concern that regional fiscal performance is caught in a vicious cycle.
“The big challenge for each and every one of us, then, is to reverse this pattern and place the BMCs firmly on a path of sustained and inclusive income growth with discernible improvements in living standards,” he said.
According to the bank’s Director of Economics Dr Justin Ram, service-oriented economies led economic growth last year, while commodity exporters, except Guyana, contracted.
“Belize recorded a modest decline, while significant contractions were recorded in Trinidad and Tobago where that economy declined by five per cent, and Suriname which declined by a further nine per cent,” Ram said.
Worrying too, was the dramatic decline in foreign currency reserves, some falling notably below benchmark levels.
“Last year, Barbados’ foreign currency reserves fell below the equivalent value of the global benchmark of three months of imports. The Bahamas and Suriname saw improvements, but reserves also remained below the three-month threshold. Foreign exchange reserves remained above the threshold in other countries. Trinidad and Tobago continued to accumulate the largest stock of foreign reserves,” Ram reported.
Smith said for regional economies to turn around, they must focus on activities to generate foreign exchange to pay for the goods they import for consumption and production.
“First, our governments must offer services that promote efficiency and cost competitiveness, whilst fostering inclusive growth and protecting vulnerable groups in our society. The second imperative is that government activity must be financed by revenue systems that meet the sufficiency criterion while promoting equity and economic efficiency,” Dr Smith advised.