Economists predict bleak outlook for Federation!
By Melissa Bryant
Reporter-SKNVibes.com
~~Adz:Left~~ BASSETERRE, St. Kitts – LOCAL Economists Arthur Williams and Hugh Heyliger discussed the implications of the global financial crisis on St. Kitts at a recently held Town Hall Meeting at the McKnight Community Centre, and left the audience with a grim assessment of the economy’s future.
Williams explained that the current crisis is due to developments in the American and European sub-prime mortgage sector and that the impending global recession was caused by rising food and commodity prices as well as a fall in consumer confidence.
In response to whether the pinch of the credit crunch would be felt in St. Kitts, Williams said, “There’s a popular saying that ‘when the US economy sneezes the rest of the world catches a cold’. The recession will affect developing countries, particularly small islands like ours. It’s still too early to say how severe its effect will be because it would depend on how long and deep the recession is.”
Williams further stated that the tourism sector would be affected immediately, due to declining tourist arrivals because persons would be uncertain of their job security or be unemployed, and it is not likely that they would go on holidays.
He outlined other possible effects including a fall in unemployment and exports, a decrease in remittances due to nationals abroad being fearful for their jobs and, slow economic growth, which would result in a reduction in government revenue.
Another possibility, he noted, is a decline in foreign direct investment as investors abroad would face increasing difficulty in accessing resources. Williams stated that some local tourism projects could be at risk, given that some major projects in the Bahamas have closed due to the closure of the banks that were financing them.
Heyliger spoke of measures that could be implemented to alleviate the effects, stating that “we have to change the fundamentals; we can’t do the same old thing and expect to find solutions if the system itself is changing”.
“Instead of giving money to banks, the government needs to rebuild infrastructure, improve the education system and generate income to restore consumer confidence. Human resource development is a great countermeasure and that’s why the Chinese and Indian economies are growing rapidly, because of their development in human capital and investment in women,” he added.
He also pleaded with persons to monitor the global situation very closely.
“We must begin to follow what’s going on in the world. We are part of a wider global community and we cannot afford to be internal. This is a situation that touches and affects us all.”
