BASSETERRE, St. Kitts – IN light of the prevailing economic and financial crises, Governor of the Eastern Caribbean Central Bank, Sir K. Dwight Venner has compelled the region to “come soberly face to face with this crisis” in order to survive the ongoing situation.
At the January 29 Eastern Caribbean Currency Union (ECCU) Economic Review held in St. Kitts, Venner assessed the causes and impacts of the crisis on the region and outlined a regional response with the aim of enabling ECCU Member States to reduce negative corollaries, despite their obvious vulnerability.
“We need to go through a reality check with this crisis which we must address through clear and objective reflection as we ponder our current circumstances and our future prospects. The bottom line of our reality is that we have small, open and vulnerable economies which are largely dependent on what happens in the rest of the world.
“The facts are that we have experienced a secular decline in our economic growth over the last three decades. The 1980s could be described as our Golden Age when growth averaged 6% based on the export of bananas, tourism receipts, foreign direct investment flows and foreign aid. “In the 1990s growth fell to an average of 3% as most of the receipts from these activities fell.
Following the events of 9/11, in 2001, the rate of growth fell in most countries to between 1% and 2%, rebounding in 2006 and 2007 due to the hosting of the Cricket World Cup and now is trending downwards again with the advent of this crisis. Given our openness and integration into the global economy, the channels of transmission of this crisis into our economies are through the real sector and the financial sector.”
Sir Venner informed that in the region’s real economy, tourism, Foreign Direct Investment (FDI) and remittances are the main areas that are affected. He said although tourism is the region’s major foreign exchange earner, tourist arrivals and expenditure have fallen, and bookings going forward “are not promising”.
“The challenge we now face would be if the recovery in the international economy does not come in 2009, we would then face two weak back to back tourist seasons. This would have, in the absence of vigorous counter measures, a very depressing effect on our economies.
“Foreign Direct Investment has shown significant declines, manifested in the slowing down or outright stoppage of major real estate and tourism projects. These stoppages will have an impact on construction with its significant employment possibilities and on the capacity of the tourist industry, through the number of rooms and properties available to add to the current stock.”
Venner indicated that in the case of remittances, though hard data is not easily obtained, available information suggests that there is some slowdown in that area as well.
The recent special joint meeting of the Organization of Eastern Caribbean States (OECS) Authority and the ECCB Monetary Union held in St. Kitts on January 15-16 also saw similar discussions among Heads of Governments identifying tourism, construction and fisheries as the main focal sectors to increase economic activity.
The region continues to address regional responses to the international economic downturn as the crisis is expected to continue into this year.
