WASHINGTON – The International Monetary Fund (IMF) says the Caribbean is beginning to turn the corner after a “long and deep recession”.
In its latest “Regional Economic Outlook,” the Washington-based financial institution said weak external demand and high public debt levels have held back economic activity in much of the region for the last two years, “which has also been adversely affected by natural disasters”.
It said tourism is “recovering gradually,” with The Bahamas, Barbados, Dominican Republic, and Jamaica observing a “faster and earlier pickup in tourist arrivals” than the islands of the Eastern Caribbean Currency Union (ECCU).
The IMF said the Caribbean economy, excluding the Dominican Republic and Haiti, is projected to expand by an average of about two per cent in 2011, following a contraction of about 0.5 per cent last year.
“The recovery is supported by a mild improvement in labour market conditions in advanced economies, as fiscal consolidation proceeds in most of the region,” it said.
However, it said rising commodity import prices present a “clear downside risk for most countries, with the exception of Trinidad and Tobago, which stands to benefit from higher oil export prices”.
Meanwhile, the report said reconstruction efforts in Haiti are expected to take growth above eight per cent this year.
In countries, where a well-functioning social safety net is not in place, the IMF recommended that temporary subsidies on staples consumed by the poor be considered, “with the fiscal cost offset by adjustments in other fiscal outlays”.
It said the region’s financial system “remains vulnerable” to shocks from cross-border financial conglomerates, adding that the resolution of the insurance subsidiaries of the CL Financial Group in Trinidad and Tobago is still pending, “with potentially large fiscal costs”. (CMC)
