ECLAC predicts slowdown for the Carib

The Economic Commission for Latin America and the Caribbean (ECLAC) says economic growth in the Caribbean this year will be much more slower than that of Latin America.

It said that the Caribbean economies will expand by a marginal 0.30 per cent in 2010 as private-sector expansion and international and domestic demands remain weak.

LatAm is projected to grow at six per cent.

But ECLAC also said the expected Caribbean performance is much better than the contraction of 3.3 per cent in 2009.

Preliminary forecasts point to positive growth of 1.6 per cent in 2011.

ECLAC said that the marginal improvement in economic activity in 2010 was mainly on account of the buoyancy of primary commodity prices and increased tourist receipts.

However, activity in the construction and manufacturing sectors remained depressed, it said, noting that fiscal consolidation in Jamaica and Antigua and Barbuda in the wake of International Monetary Fund standby loan arrangements will continue to depress demand in those countries.

Preliminary data for 2010 indicates an expansion of the fiscal deficits in the Bahamas, Barbados, Guyana, St Lucia and Trinidad and Tobago, while Suriname and St Kitts and Nevis shifted from surpluses in 2009 to deficits in 2010.

Antigua, Belize, Grenada and Jamaica recorded lower deficits. Dominica was the only country to record a surplus.

Deeper into debt

The region, overall, has fallen deeper into debt, with central government liabilities rising from 76.5 per cent of gross domestic product (GDP) in 2009 to 79 per cent in 2010.

"Relative to 2009, there were substantial debt increases in Antigua and Barbuda, St Vincent and the Grenadines and Trinidad and Tobago," the commission said.

Current account deficits improved slightly in 2010 to 16.5 per cent of GDP from 17.3 per cent in 2009, due to severe adjustment as imports declined significantly due to lower domestic demand and exports also fell as international demand remained depressed.

Overall labour market conditions worsened in 2010.

Unemployment rose by 0.80 percentage points to 10.7 per cent in Barbados as at June.

"This captures the 35 per cent decline in the number of persons employed in the construction and distributive trades during March to June 2010," said ECLAC

The unemployment rate was much higher in Jamaica, increasing from an annual average of 11.4 per cent in 2009 to 12.9 per cent in June 2010 reflective of the 86,600 jobs that were lost between October 2008 and April 2010.

And in Trinidad, the jobless increased from an average annual rate of 5.7 per cent in 2009 to 6.7 per cent at March 2010, the highest level in three years.

"In Trinidad and Tobago, total employment contracted by 24,700 persons from the first quarter of 2009 to the first quarter of 2010 with the construction sector shedding 13,300 jobs, followed by transport, storage and communi-cation sector which recorded job losses of 5,500," ECLAC said.

It said there was an overall uptick in inflation in 2010 for the Caribbean, compared to 2009, but still below levels of 2007-08.

The inflation rate was highest in Trinidad and Tobago at 13.2 per cent in September, followed by Jamaica, 11.3 per cent.

On the financial side, growth in domestic credit to the private sector decelerated, and actually declined in seven countries as consumer confidence remained weak.

ECLAC noted that natural disasters continue to pose a major challenge to growth and sustainable livelihoods.

"For instance, the earthquake in Haiti, led to the loss of 220,000 lives and damage and loss totalling US$7.8 billion - slightly greater than the country's GDP in 2009."

Most recently, Hurricane Tomas caused major damage in St Lucia and St Vincent and the Grenadines.

- CMC