For the first time since the global crisis started in 2008, the Caribbean is expected to experience a positive growth for 2013. This, according to the Economic Commission for Latin America and the Caribbean's (Eclac) Region's Growth Prospects report for 2013 presented locally by Dillon Alleyne, coordinator of Eclac's economic development unit.
At the launch of the report at Eclac's office in Port-of-Spain yesterday, Alleyne said, "Amidst the persistent challenges, we anticipate that all Caribbean countries will post positive growth, with the service producers growing at 1.5 per cent and the goods producers 3.6 per cent.
Alleyne this performance is heavily dependent on improved performance in the European Union and the United Sates, which can translate into improved demand for tourism and other export services. Reiterating the Central Bank stating in November that T&T would grow by 2.5 per cent in 2013, he said the region grew marginally relative to last year, with goods producers recording growth of 3.2 per cent and the service producers 0.4 per cent.
High debt, trade issues
Despite the good news, there has been some negative impact on the Caribbean. Alleyne said the Caribbean continues to be troubled by high debt, fiscal and trade challenges because the region continues to operate with a narrow range of markets and limited range of products. Regarding the fiscal situation, he said, some countries made strides in reducing their debt.
He said the fiscal balance for goods producers increased from -1.15 per cent of gross domestic product (GDP) in 2011 to -2.88 per cent in 2012. "Much of this is due to the investment programme of the government in Guyana. Suriname has reduced its deficit considerably and has introduced a heritage and stabilisation fund along the lines of T&T."
"The services producers deficit fell slightly from -3.98 per cent in 2011 to -3.5 per cent partly due to compression of capital spending and other fiscal consolidation programmes." Other countries, like Jamaica, are still in the unsustainable range.
"Eclac is pursuing a project aimed at improving fiscal management and public finances in the Caribbean sub-region."
Regarding inflation, average regional rates may have fallen slightly. Among the outliers are T&T with a rate of 7.70 per cent (food) and Barbados with a rate of 7.80 per cent, he said. The last quarter inflation rate may raise the overall average and this could spill over into 2013 due to Hurricane Sandy, Alleyne said.
Although data is currently available for five countries, except for Guyana, Suriname and T&T, unemployment rates are likely to remain elevated for some time, with the range in 2012 between 12 and 20 per cent, Alleyne said.
EU?exports
The report said the global downturn affected Caribbean trade. The region's exports to the European Union shrank by 4. 9 per cent in value terms, and those to China by 0.9 per cent. By contrast, the report said exports to United States increased by 4.8 per cent due to the modest growth in that economy, while intraregional exports climbed 1.4 per cent.
Growth in export values tailed off sharply for Latin America and the Caribbean overall, from 22.3 per cent in 2011 to an estimated 1.6 per cent in 2012. Alleyne said the high import dependency, both for food, capital and intermediate goods plus technology, is overcome by improving the efficiency in foreign exchange use and exporting efficiently in regional and international markets.
"The negative goods balance continues to be very large, especially among the service producing economies." "Given the narrow export base and limited markets for exports, positive economic performance in 2013 will depend heavily on improvements in the economies of the United States of America and Europe," he said.