IT IS TIME for Barbados and its neighbours in the region “to act” as they face the reality of a global economic recovery that has “again disappointed”.
Inter-American Development Bank chief economist José Juan Ruiz issued that advice as the financial institution released its 2016 Latin American And Caribbean Macroeconomic Report.
“The global recovery has again disappointed, commodity prices have fallen and are likely to stay close to current levels, and the United States’ monetary normalisation has commenced. Many of the risks analysed in previous Latin American And Caribbean Macroeconomic Reports have materialised,” the economist said.
“The region’s growth is expected to be negative this year and then to recover relatively slowly. Not until the year 2020 are growth rates expected to approach the average levels that prevailed from 1980. It is time to act.”
Ruiz did point out that there were “several positive developments and new macroeconomic, institutional, and social strengths that have evolved over recent decades”.
He added that “stronger growth in the United States and lower oil prices have helped countries, particularly in Central America and the Caribbean, that import energy and have strong trade ties with the United States”.
This, however, was offset by the fact that “for commodity exporters, though, the loss of revenues has put both fiscal and external balances under pressure”.
In such an environment, the economist said “a fiscal rebalancing toward higher levels of investment and finding ways to stimulate private investment are needed”.
Elaborating on these views, the report said “. . . the region’s limited growth prospects necessitates a more fundamental review of fiscal policies”.
“While this may call for legislative and, in some cases, even constitutional changes, such reforms may need to be considered,” it stated. (SC)