Caribbean governments have been urged to speed up legal and regulatory reform amid predictions of slower economic growth for the region, following last year’s mixed fortunes.
The advice came yesterday from the Caribbean Development Bank (CDB) which said that overall growth remained sluggish.
In its annual review of the performance of regional Borrowing Member Countries (BMCs), the Bank said the global economic difficulties of 2015, including the slowdown in China and its effect on markets elsewhere, had an overall negative impact on the region.
The vulnerability caused by a heavy reliance on overseas markets, as well as the impact of natural disasters such as storms and drought particularly in Dominica and The Bahamas, stymied growth. In some BMCs, the reduction in Correspondent Banking Relationships (CBRs) threatened the financial systems and real economies.
Recovery in the regional tourism market continued last year with most destinations seeing increases in visitor arrivals; and many reported higher numbers of the more lucrative stay-over visitors. Along with these positive trends, there was an uptick in tourism-related construction. As a result, Grenada, St. Kitts and Nevis, and the Turks and Caicos Islands (TCI) each experienced growth of more than four per cent. For some of the larger countries, such as The Bahamas and Barbados, the positive tourism impact on growth was more modest.
At the same time, the region’s five major commodity exporters – Belize, Guyana, Haiti, Suriname and Trinidad and Tobago – had lower growth than in 2014 as commodity prices fell. Significantly, Trinidad and Tobago grew by just 0.2 per cent. The main reason was a decline in petroleum output, as falling oil prices led to a cut back in some exploratory activities; some oil and gas fields matured; and there were prolonged periods of maintenance activity. LNG output also fell.
The CDB noted that joblessness within the region remained high.
“Many BMCs for which 2015 labour force data were available continued to experience double-digit rates of unemployment. On the other hand, unemployment fell in Jamaica, Belize and also in Barbados, despite that country experiencing public sector layoffs and constrained employment creation in the private sector,” it said.
In the area of trade performance, the region’s biggest oil and gas exporter, Trinidad and Tobago saw its surplus in 2014 become a deficit in 2015. Suriname’s deficit deteriorated on the back of weaker oil and gold prices. These movements also lowered the value of Guyana’s exports, but the trade deficit narrowed due to a reduced import bill.
The non-oil producing BMCs saw reductions in their import bills.
The CDB said that with high debt servicing remaining a big challenge for a number of countries, some continued to see improved performances.
In its overall assessment, CDB said that a number of global uncertainties will continue to impact the Region. It’s projecting the region will grow by just 0.3 per cent in 2016, but noted that this growth rate was insufficient to address employment, equality and poverty reduction issues. The Bank said higher rates of economic growth are needed, as well as other measures.
CDB suggested that its BMCs need to be Dynamic, Export-oriented, Competitive, Inclusive, Diverse and Environmentally-resilient economies (DECIDE), in order to achieve rates of growth on a par with other fast growing developing countries.
“This will require that BMCs focus on private sector led growth; developing educated and flexible workforces, regional integration to maximise gains; governments becoming business facilitators and efficient regulators; and the region achieving a high level of energy security,” it said.
“CDB’s 2015/2016 research programme – looking at poverty; helping MSMEs; and improving port operations – will identify a number of policy actions that could advance the region’s sustainable growth agenda. In addition, CDB will continue to work with its BMCs to address the other measures identified, helping them towards DECIDE.”
