US credit crunch will likely impact SK markets
By Ryan Haas
Reporter-SKNVibes.com
BASSETERRE, St. Kitts - TREVOR BLAKE, General Manager of the Eastern Caribbean Securities Exchange (ECSE), has informed SKNVibes that the current financial crisis in the United States should have the Federation’s stakeholders worried and taking proper precautions to protect themselves.
Monday afternoon (Sept. 29) saw the United States’ Dow Jones Industrial Average suffer a very unlucky loss of 777 points before the final bell, the worst one day loss since the 9/11 attacks, and has since caused nations throughout the world to wonder what sort of ripple effects are likely to come from such a major drag on the global economy.
“The collapse of the US housing market which led to their current credit crunch will likely affect us here in St. Kitts-Nevis in a number of ways,” Blake said. “The good thing is that we in the Caribbean are not as integrated in the world economy as some other countries are.”
He said this lesser degree of integration would likely protect the credit of those who borrow from Caribbean development banks for things like homes, thus preventing a similar collapse of the housing market from happening in St. Kitts. ~~Adz:Right~~
Kittitian and Nevisian students whose parents borrow from regional banks should also fare better than their overseas counterparts who are heavily dependent on US lines of credit, as they have become much more difficult to obtain than those within the Caribbean.
Despite these areas of continued liquidity, Blake indicated that business persons with ties to the US economy, such as those in development and tourism sectors, should brace for impact in the coming months.
“Some plans may have to be put on hold as credit in the US becomes less available. Developers may find themselves paying more in finance charges if they can even get credit and, therefore, will have less money to put into things like hotels and marinas.
“Also, those with investment portfolios in the American stock exchanges will probably be rethinking about buying that second home in the Caribbean, so those markets are likely to be affected,” Blake said.
For the average person living in the Federation, the ECSE General Manager said now is the time to begin consolidating spending and “cutting out unnecessary expenses”.
“Because we import almost everything here in the Federation, we don’t have much control over prices. Oil prices continually going up are going to make everything else more expensive and we are going to have to be more discerning about what we do and how we spend our money in the coming months and years.”
He added that those in the services sector should tighten their belts in preparation for travellers to potentially “forgo their vacations” in the 2008/2009 tourism season if the proposed US$700B ‘Bailout Plan’ does not substantially turn around the American economy in a short period of time.
