Home' Trinidad and Tobago Guardian : June 29th 2017 Contents JUNE 29 • 2017 guardian.co.tt BUSINESS GUARDIAN
INTERNATIONAL | BG23
Growth remains low
Caribbean countries have been told that
it is increasingly clear that a sound
macroeconomic framework is a pre-
requisite for sustainable growth and
that structural weaknesses often un-
dermine resilience and compromise
the buffers necessary to cope with economic shocks.
Addressing the Sagicor Cave Hill School of Business
and Management Conference On Risk Management
and Competitive Intelligence, Cleviston Haynes, the
acting governor of the Central Bank of Barbados noted
that the recent global financial crisis is but the latest
of these exogenous factors that has had a profound
impact on regional economies which are yet to recover
sufficiently to achieve pre-crisis growth levels.
Speaking on the theme "Perspectives on Growth
in the Caribbean,' Haynes said that in the early stage
of the post-crisis period, growth was driven by the
commodity-based producers but, over the last three
years, activity in the service-based economies has
exceeded, if only modestly, that in commodity pro-
ducers as commodity prices have weakened.
"To put this in perspective, while the average growth
for the region recovered to 1.7 per cent in 2014, regional
output declined by 0.7 per cent in 2016 due to the
weak performance of commodity-based economies."
He said forecasts for 2017 and 2018 are for a moder-
ate recovery as the world economic outlook remains
positive and the regional economic outturn continues
to be driven by international economic developments.
"However, the regional underperformance suggests
that economic growth cannot be linked solely to ac-
tivity in our main trade partners. Rather it reflects
the impact of the structural factors identified earlier
as well as the slow adaptation to the changing global
Haynes said of particular note is that the region as
a whole ranks in the bottom half of most of the World
Bank's Ease of Doing business indicators and this is
a source of concern as foreign investment is a vital
element of regional growth strategies.
"Notwithstanding the exogenous shocks which
these economies face, it is increasingly clear that a
sound macroeconomic framework is a prerequisite
for sustainable growth. At the same time, structural
weaknesses often undermine resilience and compro-
mise the buffers necessary to cope with economic
Haynes said that several regional economies face
chronic external current account imbalances which
are funded by a combination of foreign direct invest-
ment, public sector borrowing and the depletion of
"Persistent fiscal deficits resulting from delib-
erate fiscal strategies or the inadvertent outcomes
resulting from economic or natural shocks have led to
the significant build-up of sovereign debt in several
"These trends tend to place pressure on foreign
exchange holdings in fixed rate countries and exchange
rates in floating rate economies and have forced sev-
eral regional governments to embark on adjustment
programmes designed to address these imbalances
of large deficits and high debt ratios."
The Central Bank of Barbados official said that fiscal
space to use countercyclical policies have been eroded
as high interest costs have resulted in the need for
large primary surpluses in some countries in order
to restore balance to the public finances.
He said it is in this context that he wanted to refer
to the Barbadian experience.
Haynes said that the Barbadian economy has en-
countered multiple policy challenges in the aftermath
of the global financial crisis, as policy makers in a low
growth environment have sought to preserve exchange
rate stability through the maintenance of adequate
foreign exchange buffers, to alter the path of public
sector debt dynamics and to create a macroeconomic
environment for long-term sustainable growth.
"The macroeconomic strategy has focused on
demand management so as to reduce outward for-
eign exchange flows while alleviating the financing
pressures that have been placed on government by
large fiscal imbalances. This strategy has been but-
tressed by measures to enhance the economy's long
term competitive position through fiscal incentives
for the foreign exchange earnings and saving sectors."
Senior Barbados Central Bank official on
performance of Caribbean economies
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