Home' Trinidad and Tobago Guardian : February 23rd 2017 Contents BG6 | NEWS
BUSINESS GUARDIAN guardian.co.tt FEBRUARY 23 • 2017
modest growth in 2017
Atthe Caribbean De-
ence in Barbados
last Friday, a grim
picture of the Caribbean's current
state of economic and social affairs
The small island developing states
remain vulnerable and poorly in-
sulated from external shocks over
which they have very little control.
Since the onset of the global finan-
cial crisis in 2008, and the precipi-
tous decline in international com-
modity prices beginning in 2014,
the region has suffered persistent
declines in tourism, manufacturing
and energy and commodity related
In 2016, according to CDB data,
economic activity in the region (as
measured by changes in Gross Do-
mestic Product) declined by approx-
imately 0.9 per cent.
For 2017 however, the bank is pro-
jecting modest growth in regional
output at around 1.7 per cent.
Director of Economics at the CDB
Dr Justin Ram stated, quite frankly,
that the time for change across the
region had come as further delays
in making the neccessary, albeit in
some instances painful, adjustments
would cause further fallout in the
economic and social fabric of the
The CDB's data supports his as-
sessment and proves quite telling.
Across the region economic
growth remains tepid. Though many
territories registered some level of
growth in real GDP, the growth
momentum was by no means en-
Turks and Caicos, Antigua and
Barbuda and Anguilla proved to be
the leaders in economic output with
GDP growing by 4.4, 4.4 and 3.8 per
cent respectively in 2016.
The biggest laggards on regional
growth were T&T and Suriname.
The fall off in energy prices, and
the decline in the price of gold; a
major export commodity supplied
by Suriname, along with a reduction
in the volume of oil and natural gas
in T&T were primarily responsible
for the steep economic contraction
in both economies.
According to CDB data, real GDP
fell by nine per cent and five per cent
in Suriname and T&T respectively.
Of note was the performance of
Jamaica. After years of contracting
GDP, the country seems to be ben-
efitting from the implementation
of the IMF structural adjustment
guidelines and registered growth
of 1.7 per cent in 2016 according to
The level of unemployment in the
region remains unreasonably high
across many territories.
Countries such as St Lucia, Baha-
mas, Suriname and Jamaica contin-
ue to experience double-digit rates
of unemployment within their re-
The impact of persistently high
unemployment (and underemploy-
ment) places a tremendous strain on
fiscal and social resources.
Inability to raise tax revenue from
unemployed labour curtails the abil-
ity of the government to finance so-
cial safety nets and stimulate growth
in other areas of the economy, thus
placing these territories into what
CDB President Dr Warren Smith
called a "vicious cycle"
Additionally, the social fallout
from high levels of unemployment
include crime and increased migra-
tion that both reduce the available
pool of domestic labour further,
while placing an additional burden
on the economic and social resourc-
es of other territories.
Again, the high levels of unem-
ployment show the vulnerability of
economies highly dependant on nat-
ural resource endowments (example,
tourism in St Lucia and oil and gas
and gold in Suriname).
Ease of doing business
A major challenge confronting re-
gional territories is the ease of doing
business. Crucial to attracting for-
eign direct investment and getting
potential local investors incentivized
to mobilise capital involves creating
an enabling environment to support
According to CDB data, with the
exception of Guyana, the ease of do-
ing business deteriorated in every
borrowing member country. (BMC).
T&T moved four spots downward
Doing Business Index, while St Lucia
registered the steepest fall moving
eight spots downward from 78 to 86.
A huge part of improving the
business environment requires
upgrading and modernising the
institutions of the region.
Government services (the public
sector), capital markets and even the
banking sector of most territories
would benefit from an improved use
of technology, increased skills train-
ing and institutional strengthening
according to the CDB.
Additionally, greater engage-
ment of stakeholders (civil society,
labour unions, the private sector)
on matters of national importance
would go a long way in creating an
environment of transparency that
is needed to overcome perceptions
of graft and rampant corruption in
doing business in territories of the
Most worrying for countries of
the region is the declining levels of
tourist arrivals and falling commod-
Being highly dependant on these
sectors for economic activity and the
resultant foreign exchange earnings,
persistent declines pose a material
threat to future levels of GDP growth
for countries in the region. The rate
of visitor arrivals has been deceler-
ating since the fallout of the global
financial crisis, falling by as much
four per cent between 2014 and 2017
according to CDB data.
With respect to commodities,
countries such as Trinidad and
Suriname have suffered the greatest
levels of economic contraction as a
result of their heavy dependence on
natural resource revenues.
Countries such as Grenada and
Jamaica also had to grapple with
reductions in the price for spic-
es and coffee in the international
commodities market as well.
The CDB has recommended a
multi-pronged approach for tack-
ling the issues plaguing the region.
Firstly, there is the need for strong,
targeted social development pro-
grammes to ensure that everyone
can contribute and share in the
benefits of growth.
Secondly, the bank is recommend-
ing an aggressive approach to tack-
ling all obstacles with the potential
to hinder economic growth. This re-
quires rigorous debt management,
and expenditure and revenue re-
forms across the region.
Finally, the CDB is advocating the
need for the reform of governance
and institutional strengthening
across its BMC's. It is the bank's
belief that once these issues are
confronted and successfully han-
dled, the future of the region will
be brighter than its past.
...but warns against delaying adjustment
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