Home' Trinidad and Tobago Guardian : October 26th 2014 Contents SBG4 | NEWS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 26 • 2014
Noted economic commentator, Professor Nouriel Roubini,
has called on Caricom nations to deepen trade and financial
integration to address the issues of small size, high debt levels
and the need for greater diversification.
He created consternation at the forum when he declared
that the currencies in the region are overvalued to different
degrees and that "currency adjustment is part of the solu-
He said Caribbean countries were weary about adjusting
the value of their currencies for a number of reasons, including
higher inflation and higher input costs of exports.
While he said he was aware of the risks of currency adjust-
ment, "The reality is that if your currency is overvalued, if
your external imbalances are large, if that implies a significant
increase in your foreign liabilities eventually and increases
your foreign debt making it unsustainable, then devaluation
Speaking to regional journalists in Montego Bay, Jamaica
on Thursday afternoon on the sidelines of an International
Monetary Fund (IMF) forum on "Unlocking Economic Growth,"
Roubini advocated greater integration: "I would say first of all
that you need a greater amount of trade integration.
"If you are a small island, the size of your market is limited
by the size of your island and if you have a full integration---
economic, trade, financial and otherwise---then you can see
how individual parts of this system economies can specialise
in a variety of different production and service activities in
which they have comparative advantage. Therefore they would
have a much larger market than they have right now."
He said greater trade, financial and economic integration
also helps to insure against risks that may arise from individual
shocks, vulnerabilities or natural disasters---all of which Caricom
nations have suffered in the last two decades.Roubini bats for
"You need more cooperation, more integration and more
openness to trade and financial investment, in addition to
national policies to incentivise the kind of industries that are
within the comparative advantages of individual nations," said
The IMF forum, which was held on Thursday and Friday
at the Montego Bay Conference Centre focused on three policy
concerns that the region faces as it tries to achieve stronger
and sustained growth in the wake of the global financial crisis:
energy costs, tax competition and financial sector vulnerabil-
On the issue of oil prices, which have plummeted by about
25 per cent in the last two months, Roubini said he expects
a stabilisation at around current levels, adding that if there
were a further decline to US$80 a barrel, "there might be a
reaction by large producers in OPEC to restrict supply to
prevent prices falling further."
Light, sweet crude for December delivery gained $1.57, or
2 per cent, to US$82.09 on the New York Mercantile Exchange
after falling on Wednesday to US$80.52 a barrel, the lowest
price since June 2012.
Roubini said the recent decline in oil prices would affect
different Caricom countries in different ways, given the fact
that most regional countries are net oil importers, while one,
T&T, is a net exporter of oil and refined petroleum products.
Roubini said: "While oil prices are falling right now---and
that provides something of a boon to countries that are net
oil importers---all the investments in alternative energy and
energy efficiency should not be postponed."
Roubini, a professor at New York University s Stern School
of Business and the chairman of his own economic consultancy
firm, shot to prominence eight years ago as he was one of the
few public thinkers in the US who predicted that "the United
States was likely to face a once-in-a-lifetime housing bust,
an oil shock, sharply declining consumer confidence, and,
ultimately, a deep recession."
Nicknamed Dr Doom, Roubini said that Venezuela s Petro-
Caribe initiative, which provides financial assistance to many
regional oil-importing countries, may be at risk if oil prices
remain at low levels for an extended period.
"One should also be aware that while the fall might be a
net benefit to importing countries, there is this scheme, Petro-
Caribe, where Venezuela is subsidising imports of Venezuelan
oil by a number of Caribbean countries.
"Venezuela, which is in a severe economic mess, might not
be able to afford to subsidise these countries any longer. If
they decide that they can no longer afford PetroCaribe, then
that situation could have a negative impact on the cost of
importing energy for a number of these Caribbean countries.
"One of the side effects of this falling oil price might turn
out to be a negative rather than a positive for countries that
rely too much on PetroCaribe."
Five important factors
Delivering the feature address on Friday morning, Roubini
said that there were five global trends that are likely to have
an impact on the Caribbean in the future: the recovery of US
economic growth; the possibility of the normalisation of
interest rates by the Federal Reserve in the US; the slowdown
of China and other large emerging markets; the end of what
he called the commodity super cycle and the strength of the
All of these factors posed both threats and opportunities:
• On the issue of the recovery in economic growth in the
Roubini bats for integration, devaluation
Continued on Page 5
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