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Economist warns: US govt shutdown could hurt T&T

Friday, October 11, 2013

Republic Bank economist Ronald Ramkissoon has said that if the US Federal Government’s shutdown leads to greater economic uncertainty, there will be implications for T&T and the rest of the Caribbean. “While the world, the Caribbean included, is more and more turning to emerging economies for trade, dependence on North America and Europe is still critical for this region. As such, if the situation in the US worsens there will be implications for the Caribbean,” he told the T&T Guardian yesterday. The US Federal Government shutdown is now in its 11th day. 


The Federal government officially shut down for the first time in 17 years on October 1, after House Republicans refused to drop demands that parts of the Affordable Care Act be delayed in return for approval of a mandatory government funding bill. Everything from national parks to national security to Federal Courts and other important parts of the US economy that depend on Government services have been partially shutdown. Ramkisson said Foreign Direct Investment (FDI) and other areas of the Caribbean and T&T economy will be affected. “This in terms of FDI, tourism, and business confidence in general. The developed world is still struggling to achieve strong and sustainable growth and a failure in fiscal management in the US can only make the situation worse for that country and all its trading partners,” he said. 


Ramkissoon expresses confidence that there will be solution in the US. “My expectation is that politics would not trump economics and that the strength of that country’s institutions would save the day, for that country and for the region. I hope that I am right,” he said. Abrahim Ali, president of the San Juan Business Chamber is hoping the situation in the US will be resolved quickly. “I do not think there would not be an immediate impact from the Federal Government shutdown but there will be an impact in the long term,” he said. There are a number of key economic areas that can be affected if the major US political parties do not resolve the crisis. “A lot of employment is hinged on what happens in the US economy. We also have exports to there and if the US economy worsens then it could impact on that too,” he said. There are concerns that prolonged shutdown could impact several Caribbean economies by adversely affecting tourist arrivals from the US. That concern was raised earlier this week by Thomas Helbing, Chief of the World Economic Outlook Division of the IMF, when he spoke to journalists after a World Economic Outlook press conference at the IMF Headquarters in Washington DC.


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