ECLAC: BAR­BA­DOS STILL ‘SICK MAN OF THE CARIBBEAN’

The Star (St. Lucia) - Business Week - - REGIONAL -

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?

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