ECLAC: Re­cov­ery of Growth in the Caribbean De­pends on In­vig­o­rat­ing Pub­lic and Pri­vate In­vest­ment

The Star (St. Lucia) - - LOCAL -

The Eco­nomic Com­mis­sion for Latin Amer­ica and the Caribbean (ECLAC) on Tues­day pre­sented its 2016 an­nual eco­nomic re­port, in which it fore­casts that the re­gion will con­tract -0.8% this year, mark­ing a steeper de­cline than in 2015 (-0.5%)

The United Na­tions re­gional or­ga­ni­za­tion pre­sented its Eco­nomic Sur­vey of Latin Amer­ica and the Caribbean 2016, in which it stresses the ur­gent need to mo­bi­lize in­vest­ment—both pub­lic and pri­vate—to pro­mote the re­gion’s eco­nomic re­cov­ery and meet the chal­lenges im­posed by the 2030 Agenda for Sus­tain­able De­vel­op­ment.

“The ca­pac­ity of coun­tries to ac­cel­er­ate eco­nomic growth de­pends on the spa­ces for adopt­ing poli­cies that sup­port in­vest­ment. These poli­cies should be ac­com­pa­nied by ef­forts to change the con­ver­sa­tion be­tween the pub­lic sec­tor and pri­vate com­pa­nies. In­creas­ing pro­duc­tiv­ity is also a key chal­lenge for mov­ing for­ward along a path of dy­namic and sta­ble growth,” said Ali­cia Bárcena, Ex­ec­u­tive Sec­re­tary of ECLAC.

The sur­vey in­di­cates that in the ex­ter­nal arena, the global economy will main­tain low lev­els of growth, which will be ac­com­pa­nied by a slow ex­pan­sion in trade, which has not man­aged to re­cover the lev­els seen be­fore the in­ter­na­tional fi­nan­cial cri­sis. On top of this, the re­port points to de­te­ri­o­rated prices for the re­gion’s com­modi­ties ex­ports and greater in­ter­na­tional fi­nan­cial uncer­tainty and vo­latil­ity, which have in­creased since the United King­dom voted to leave the Euro­pean Union (the so-called Brexit).

In the re­gional sphere, the re­port fore­casts a -2.1% con­trac­tion for South Amer­ica in 2016. Cen­tral Amer­ica will grow 3.8% thanks to the boost com­ing from its im­proved terms of trade, the re­cov­ery of its ex­ter­nal and do­mes­tic de­mand, and in­creased in­come from re­mit­tances. The Caribbean, mean­while, will suf­fer a -0.3% con­trac­tion in its Gross Do­mes­tic Prod­uct (GDP).

“Faced with an eco­nomic con­trac­tion, the re­gion needs pro­gres­sive struc­tural change with a big en­vi­ron­men­tal push that pro­motes de­vel­op­ment based on equal­ity and sus­tain­abil­ity, as we have pro­posed in our in­sti­tu­tional doc­u­ment Hori­zons 2030: Equal­ity at the Cen­tre of Sus­tain­able De­vel­op­ment, which we pre­sented in Mex­ico last May,” Ali­cia Bárcena said.

The eco­nomic de­cel­er­a­tion will have an im­pact on the ur­ban un­em­ploy­ment rate which is ex­pected to in­crease in 2016. In­fla­tion, mean­while, should be­have sim­i­larly to that of last year, with greater pres­sures on south­ern economies.

In its Eco­nomic Sur­vey 2016 ECLAC calls for re­sum­ing the path of growth and mo­bil­is­ing fi­nan­cial flows for de­vel­op­ment fi­nanc­ing. To achieve that, coun­tries must change their fis­cal struc­tures to im­prove tax col­lec­tion and pro­gres­siv­ity, strengthen in­come taxes (both for in­di­vid­u­als and com­pa­nies), and fight tax eva­sion and avoid­ance. Ad­di­tion­ally, it is nec­es­sary to pro­mote re­newed pub­lic-pri­vate coali­tions and poli­cies that cre­ate ap­pro­pri­ate in­cen­tives to chan­nel fi­nanc­ing to­wards de­vel­op­ment goals. Also, fi­nan­cial in­clu­sion should be strength­ened as a pol­icy of pro­duc­tive in­ser­tion through the cre­ation of mar­kets and new in­no­va­tive in­stru­ments.

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