CARIBBEAN COUNTRIES continue to face “significant challenges” and the proof of this is the “low potential growth” and “stagnant productivity” now affecting the region.
That’s the latest forecast from the International Monetary Fund (IMF). Following its annual meetings jointly held with the World Bank in Lima, Peru recently, the World Bank last week released its new outlook for the Western Hemisphere, warning that “despite the recovery in the tourism-based economies and the resilience of commodity exporters, the Caribbean continues to face significant challenges that have manifested themselves in low potential growth and stagnant productivity”.
“Improved long term prospects require a stronger implementation of structural policies going forward. In particular, policymakers in many Caribbean economies should redouble efforts to mitigate high production costs, such as better aligning wage setting with productivity trends; strengthening regulation of utility tariffs; and addressing pressures to the finance costs of businesses,” the report said.
“Measures to boost structural competitiveness should aim to improve educational attainment and mitigate skill mismatches, accelerate contract dispute resolution processes, and reform insolvency regimes. Finally, and critically, policies will need to build stronger resilience to natural disaster events, such as Tropical Storm Erika, which struck Dominica in August with tragic consequences.”
On a positive note, the IMF said “similarly to Central America (and unlike South America), low commodity prices and a strengthening US economy imply a brighter outlook for most of the Caribbean”.
“More specifically, in 2014 the tourism sector was a strong contributor to growth in the tourism-intensive economies of the Caribbean, owing to strengthening visitor arrivals (buoyed by the US recovery).”
It added: “The large external current account deficits in most of the tourism-based countries are expected to improve owing basically to lower fuel import bills and to stronger tourism receipts.” (SC)