Slight boost expected for region in 2014

IN 2014 the economies of the region are expected to grow by 2.5 per cent, up from the 1.5 per cent in 2013. However, in 2014, unemployment is expected to increase in the region.

Dr. Justin Ram, Director, Economics Department at the Caribbean Development Bank (CDB), addressed a news conference on Tuesday at the Bank’s headquarters to highlight the performance of the region for 2013 and to give an outlook for 2014.

Dr. Ram indicated that “growth in 2014 will be driven by the continued recoveries in Tourism as well as Foreign Direct Investment, which would have spin-off benefits in terms of construction and other real sector activity”.

The CDB, in its performance report, stated that “the region is expected to accelerate, growing by 2.5 per cent on average in 2014, led by Guyana, Haiti and Suriname”.

Growth is expected for all 19 BMCs, with most again set to grow by one per cent to three per cent. However, unemployment is expected to remain high, reflecting labour market rigidities and in some cases, fiscal consolidation leading to cutbacks in public sector spending.

In terms of performance in 2013, preliminary estimates indicate that CDB’s BMCs grew by an average of 1.5 per cent in 2013 compared with 1.2 per cent in 2012. However, there were some exceptions, there was a drop in output namely in Anguilla, Barbados, British Virgin Islands and in St. Lucia.

The Director explained, “Goods-based economies outperformed service-oriented economies of our region, most of the growth was led by Guyana, Haiti and Suriname and to some extent Trinidad and Tobago, although the growth rate of that economy was not as high as the other three.

Manufacturing rebounded in Trinidad and Tobago, Guyana and in Barbados, where food production also showed some improvement and that helped its manufacturing sector.

In the tourism sector, stay-over arrivals increased across nations, as the recovery in key US and Euro Area markets continued.

The exceptions were Antigua and Barbuda, The Bahamas, Barbados, Dominica, Grenada and St. Vincent and the Grenadines, where airlift challenges and high intra-regional travel costs affected visitor arrivals.


“Due to the fact we have lower tourism arrivals and lower tourism receipts, there has been a knock-on effect of the fiscal performance of many of our countries,” the CDB said.

“However, small size is no excuse for underperformance. Caribbean economies are still lagging behind other small island developing states; it means that certain critical structural problems need to be addressed within our economies if we are to have sustainable and lasting growth in the future. Some of these reforms address the cost of doing business in our countries, examining overall cost of energy in our economies as well as the need of governments to further tighten our fiscal accounts.”

He made mention that in St. Lucia and Barbados, there was notable deterioration in debt accumulation.

Dr. Ram identified in the regional outlook, “The recovery in regional tourism is expected to strengthen with the anticipated faster growth in the US and a return in the Euro Area as well as expectations of improved airlift and reduced fuel cost resulting from further declines in commodity prices.

“Regional policymakers are faced with a number of critical challenges in 2014. The need for further fiscal adjustment in several BMCs is juxtaposed with the need to increase investment in infrastructure and undertake critical policy reform needed to create a more enabling environment for private sector development.

“These challenges are compounded by the region’s vulnerability to natural hazards and climate change impacts, and its dependence on imports for food and fuel. Issues of adjustment, competitiveness, resilience, and critically, access to finance for investment in these areas will, therefore, be the focus of CDB’s engagement with its BMCs in 2014.” (NB)