CDB predicts slow economic growth for the Caribbean

BRIDGETOWN, Barbados (CMC):

A senior official of the Barbados-based Caribbean Development Bank (CDB) said Tuesday that regional economies will recover slowly from the global economic crisis even as she insists that it is not all doom and gloom.

CDB's Director of Economics, Dr Denny Lewis-Bynoe, told a news conference that the region's economic recovery will hinge mainly on the performance of its key trading partners in North America and Europe.

However, she noted that the global outlook is at best, fragile, and Caribbean economies are likely to post modest growth

"The regional outlook for 2011 hinges mainly on external developments. In this regard, the fact is that downside risks to the global outlook are still elevated and that the recovery is expected to remain somewhat asymmetric, with lingering weakness in advanced economies is critical.

"Taken together with the fact that the business cycles of regional economies tend to be highly correlated with those of advanced economies, especially key North American and Euro-pean export markets, these factors imply modest recoveries for most economies in the region," Lewis-Bynoe said.

"However, as with the global outlook, there is a high degree of uncertainty surrounding these expectations."

Depressed conditions

The CDB noted that in 2010, economic conditions in the region were depressed even as the world economy rebounded from the 2008-2009 recession.

It said that of the 18 borrowing member countries (BMCs), 12 recorded contractions while six showed growth last year.

"Among the 12 that contracted, the contractions were marginal in Barbados, Jamaica, Dominica and Trinidad and Tobago (under one per cent), moderate in Grenada and St Vincent and the Grenadines (one to three per cent ) and ranged from -3.9 and -8.5 per cent in Anguilla, Cayman Islands, Montserrat, Antigua and Barbuda, St Kitts and Nevis and Haiti," she said.

The Bahamas, St Lucia, Turks and Caicos Islands, Belize, British Virgin Islands and Guyana, posted growth ranging from 0.5 to 3.6 per cent.

The CDB is also projecting improved performances in key sectors such as tourism, construction and financial services. But it, however, pointed out that job growth is likely to lag and unemployment levels will, therefore, remain high.

The region's premier lending financial institution also forecasts that governments will continue to cut their expenditure in a bid to reduce debt levels.

It, however, warned that given the impact of rising prices in expenditure together with the unavoidable costs associated with hurricane rehabilitation, fiscal consolidation will remain a serious challenge for most regional economies.

"As a result, with the exception of a few countries, deficits are likely to widen further and debt levels are expected to continue to rise, unless greater efforts are made to control expenditure," Lewis-Bynoe said.