BASSETERRE, St. Kitts – ONE week ahead of the May 4 launch of the International Monetary Fund’s (IMF) Regional Economic Outlook, senior advisors in the Western Hemisphere Department have handed down a bleak outlook for the Caribbean.
Speed of recovery in Latin America and the Caribbean (LAC) has been widely varied, due to the different structural features across the region. In a press conference held on April 24, Head of the Department Nicolas Eyzaguirre said the countries within the LAC region will see several policy challenges in the near term and the Caribbean would be subject to difficult economic times.
“In the regional picture, countries with strong policy frameworks that are very well-connected to financial markets and are also net commodity exporters will be the ones growing most. On the other extreme, I would say that some smaller economies that are heavily dependent on tourism and remittances and are highly indebted are still facing some difficulties,” Eyzaguirre stated.
Within the LAC sub-grouping, the Eastern Caribbean Currency Union (ECCU) has introduced a plan to strengthen fiscal policy and return the region to a path of sustainable economic growth. Each country within the union adopted the Eight Point Stabilization Programme in December 2009, which is expected to guide the harmonious recovery efforts.
However, Senior Advisor in the Department Rodrigo Valdes projected “very slow” growth for the region as unemployment and labour markets in source countries have not been recovering at a favourable rate. He explained that drastic measures must be taken in order to protect the vulnerable in these countries.
“Our assessment is that the recovery in these countries will be very slow, too—for example, in a few countries, we will have still negative growth, although by very little. What to do there? Well, these countries, some of them in particular, have very high debt levels and, therefore, the space for policies is very constrained. What we tell them is that the focus of the effort has to be for the most vulnerable, and probably some projects have to be postponed for some time,” Valdes explained.
In a press briefing of the ECCB Monetary Council held last month, Governor of the Eastern Caribbean Central Bank Sir K. Dwight Venner said the ECCU has “just started” implementing its recovery strategy, adding that the Stabilization and Growth Programme outlines a three-year period of adjustment.
“What we are going to find is that 2010 is going to be a little difficult for us if things stay as they are, but because of the Eight Point Programme we’re going to be making maximum efforts to react to that,” he explained.
When launched next week, the Regional Economic Outlook is expected to outline an appropriate set of policies depending on what each country’s structure is.
