The Caribbean is be­gin­ning to turn the cor­ner af­ter a long and deep re­ces­sion, ac­cord­ing to the In­ter­na­tion­al Mon­e­tary Fund's (IMF) 2011 Re­gion­al Eco­nom­ic Out­look for the west­ern hemi­sphere. A re­port pub­lished yes­ter­day by Caribbean 360 said the IMF not­ed weak ex­ter­nal de­mand and high pub­lic debt lev­els have held back eco­nom­ic ac­tiv­i­ty in much of the re­gion for the last two years. But the Caribbean econ­o­my, ex­clud­ing the Do­mini­can Re­pub­lic and Haiti, is pro­ject­ed to ex­pand by an av­er­age of about two per cent this year, fol­low­ing a con­trac­tion of about half per cent last year.

The re­port point­ed out that tourism was re­cov­er­ing grad­u­al­ly, with The Ba­hamas, Bar­ba­dos, Do­mini­can Re­pub­lic and Ja­maica ob­serv­ing a faster and ear­li­er pick­up in tourist ar­rivals than the small­er is­lands of the East­ern Caribbean. How­ev­er, ris­ing com­mod­i­ty im­port prices present a clear down­side risk for most coun­tries (with the ex­cep­tion of Trinidad and To­ba­go which stands to ben­e­fit from high­er oil ex­port prices), the re­port said. The ris­ing prices in­clud­ed food and en­er­gy prices and the IMF said that giv­en the high debt bur­den in most Caribbean coun­tries, fis­cal con­sol­i­da­tion should pro­ceed.

"In this, ef­forts will be need­ed to re­al­lo­cate spend­ing to pro­tect the poor from the im­pact of high­er food and en­er­gy prices," the IMF said. Spe­cial ef­forts would be re­quired to con­tain ex­pen­di­ture growth and in par­tic­u­lar wages to strength­en over­all com­pet­i­tive­ness and price sub­si­dies should be avoid­ed, par­tic­u­lar­ly in the case of en­er­gy, as they tend­ed to be cost­ly and lim­it sub­sti­tu­tion, it added. Mean­while, the IMF not­ed that the fi­nan­cial sys­tem re­mained vul­ner­a­ble to shocks from cross-bor­der fi­nan­cial con­glom­er­ates and urged reg­u­la­tors to re­solve the Cli­co/British Amer­i­can In­sur­ance mess.

Ad­di­tion­al­ly, it said that im­proved ex­port per­for­mance was cru­cial to boost­ing and sus­tain­ing growth in the Caribbean over the medi­um term. It said ef­forts to fur­ther de­vel­op and di­ver­si­fy Caribbean ex­ports were need­ed, in­clud­ing re­fresh­ing the tourism prod­uct by di­ver­si­fy­ing mar­kets and de­vel­op­ing new high val­ue-added ex­port ser­vices to take ad­van­tage of the new and emerg­ing growth poles, in­clud­ing off­shore fi­nan­cial cen­tres.