The Caribbean region may be in for some tough economic struggles during the next four to five years if the countries of the region are to have any significant economic growth. This was the view expressed by co-ordinator of the Economic Development unit of the Economic Commission for Latin America and the Caribbean (ECLAC) Dillon Alleyne.
He was speaking yesterday after the videocast launch of the report titled: Economic Survey of Latin America and the Caribbean, at ECLAC's subregional headquarters for the Caribbean, Chancery Lane, Port-of-Spain. "We have also observed that the debt problem is so severe that it cannot be tackled in the immediate short run...it has to be a gradual process of fiscal consolidation," he said.
"You've heard the budget presentation yesterday with respect to Trinidad and it is a recognition that there is a slowing down of the economy and calls for some stimulus," he said. Alleyne said this stimulus might not be possible for all the countries of the region because of fiscal space. "Many of the other countries in the Caribbean, maybe except for Guyana and Suriname, don't have the fiscal space for any kind of significant stimulus," he said.
"So there really has to be a gradual attempt at fiscal consolidation and it has to be done in a way that does not affect the social protection systems which very much come under threat in periods of economic decline and stress," he said. He also explained why the Caribbean economy may have had a slower growth rate recently. "Part of this has been due to the slowdown in China and some East Asian economies that are our greatest source of demand for goods and exports," he said.
"The story is very different with the service producers and much has been made of that...high debt problems." He added, however, that there would be some positive growth from some service providers. "Much of this depends on continuous improvement in the United States and the settling of the challenges in Europe because these are the largest markets for services, largely tourism services and offshore financial services," he said.
Alleyne said there was need for both the private and public sector, as well as other industries, to form alliances in an effort to keep the economic growth of a country on a steady upward path. "We also note that there has been no significant upturn in the response of the private sector, despite what clearly has been a reduction...a trending down of interest rates in the Caribbean," he said.
"And this raises an important question as to whether there has to be a lot more private sector\public sector partnership to really reduce the risk to the private sector in small economies like the ones we are talking about." He said the Organisation of Eastern Caribbean States (OECS) had handled their approach to economic growth differently by viewing the issue as a regional one and had all come together and created a stimulus package. He believed this was something that should be considered to ensure growth.
"The slowdown in China and the difficulties elsewhere suggest that we do not have a very optimistic outlook, but I think careful management could allow us to meander out of this crisis," Dillon said. "Our prediction for 2013 suggests positive growth...That depends very much on the conditions of the international market." He said because it was such a tumultuous time in the world economy, unemployment had risen significantly in the Caribbean region-up to 16 per cent in certain countries.
