ECLAC: BARBADOS STILL ‘SICK MAN OF THE CARIBBEAN’
The Barbadian economy is expected to crawl dead last among Caribbean economies over the past year, shrinking by a disappointing -0.5 per cent last year, the second lowest growth rate region-wide, according to the United Nations economic watchdog for the area.
Barbados is expected to have the lowest growth of just 0.5 per cent in 2019, said the latest report from the Economic Commission for Latin America and the Caribbean (ECLAC).
When lined up against the other 32 nations in Latin America, South America and the Caribbean, Barbados’ decline of -0.5 per cent for the year places it as the economy with the fifth lowest growth rate.
Growth is expected to be led by Antigua and Barbuda at 5.3 per cent; Grenada,
5.2 per cent; Guyana, 3.4 per cent; and St Vincent and the Grenadines at 3.2 per cent, it said.
Dominica is expected to record a dismal -4.4 per cent decline, while other economies in the region are expected to record between 1.5 per cent and 2.5 per cent growth. But for the coming year, ECLAC is forecasting that Dominica’s economy will lead the region’s growth by a massive 9 per cent expansion.
Barbados, on the other hand, is likely to see a meagre 0.5 per cent growth. Other regional economies are to experience growth rates between 1.5 per cent and 4.7 per cent.
ECLAC said the overall growth for the Caribbean last year will be 1.9 per cent, and 2.1 per cent in 2019.
In the three regions, Venezuela will have the lowest growth with a decline of -15 per cent. Also recording declines last year will be Nicaragua at -4.1 per cent and Argentina at -2.6 per cent.
Nicaragua, Argentina and Venezuela are also expected to record declines this coming year, according to ECLAC.
2019 “looks to be a period in which global economic uncertainties, far from waning, will intensify and will arise from different fronts”, said the United Nations regional organisation.
“This will have an impact on the growth of the economies of Latin America and the Caribbean, which, on average, are seen expanding 1.7 per cent,” it added
Unveiling the Preliminary Overview of the Economies of Latin America and the Caribbean 2018 report in the Chilean capital, Santiago, ECLAC’s Executive Secretary Alicia Bárcena said that “public policies are needed to strengthen sources of growth and cope with the scenario of uncertainty at a global level”.
The report pointed out that countries in the Caribbean and Latin America would confront a complex global economic scenario in the coming years, in which
“less dynamic growth is expected, both for developed countries as well as emerging economies, along with increased volatility of international financial markets”.
On top of this, it said, there was a structural weakening of international trade, aggravated by trade tensions between the United States and China.
The economic growth projection of
1.7 per cent for Latin America and the Caribbean in 2019 is slightly below what ECLAC released last October, which was 1.8 per cent.
This year’s estimate for Latin America and the Caribbean was also trimmed, from the 1.3 per cent forecast in October, to the current 1.2 per cent.
The ECLAC document said “The greatest risk to the region’s economic performance in the run-up to 2019 continues to be an abrupt deterioration in the financial conditions for emerging economies.
“The active role of fiscal policy in the region in terms of revenue and spending must be bolstered. In this sense, it is essential to reduce tax avoidance and evasion and illicit financial flows. At the same time, direct taxes and also health-related and green taxes must be strengthened,” said Bárcena.
On the region’s spending patterns, the senior UN official said in order to stabilise and invigorate growth, public investment must be focused on projects that have an impact on sustainable development, with emphasis on public-private partnerships and on productive re-conversion, new technologies and green investment.
“All of this while protecting social spending, above all in periods of economic deceleration, so that it is not affected by cutbacks,” added Bárcena, who also warned that public debt profiles must be taken care of in light of the uncertainty that could increase their cost and levels.
Economic growth in the Caribbean was led especially by tourism and construction.
The report said that the Caribbean continued its “fiscal efforts”, leading to higher primary surpluses and a downward trend in public debt.
The report recommended that regional economies come up with public policies to strengthen the sources of growth and to face the situation of uncertainty.
It also called for a strategic view to grow and face external vulnerabilities, while pointing to the need for greater use of technology, “reinventing regional integration beyond infrastructure and trade”, and changing the export structure through productive transformation and diversity.
In launching the Preliminary Overview of the Caribbean 2018, Coordinator of Economic Development Unit of ECLAC, Port of Spain Sheldon McLean said energy independence and diversifying of economy were critical to the region’s sustainability.
“Over the years, countries such as Jamaica and Barbados have made significant strides towards increasing their renewable energy production. However, there is room for these efforts to be strengthened in other countries,” he said.
Though making no mention of the ongoing Barbados Economic Recovery and Transformation (BERT) programme, which Prime Minister Mia Mottley reported recently has yielded significant economic progress, the preliminary overview document pointed out that Barbados had taken “remedial action” by finalizing a fouryear extended fund facility arrangement with the International Monetary Fund (IMF) in October.
Barbados Prime Minister Mia Mottley, leader the Barbados Labour Party government, has been rolling out comprehensive fiscal reforms since her party’s victory in May 2018, but will 2019 prove to be a turnaround year or yet another year of lacklustre economic performance?