Studies and Perspectives Series - The Caribbean No.74
The report provides an overview of the economic performance for 2017 of the Bahamas, Barbados, Belize, Guyana, Jamaica, Suriname, Trinidad and Tobago plus the eight Member States of the Eastern Caribbean Currency Union (ECCU), and the outlook for 2018. Data were collected from a review of reports from subregional institutions as well as national governments and interviews with government officials in each of the countries examined.
Growth in the Caribbean is projected at 2.9 per cent in 2018, picking up from 0.7 per cent and 0.6 in 2017 and 2016, respectively. Caribbean economies have demonstrated considerable economic resilience despite considerable damage and losses resulting from the recent hurricanes. However, the performance of the goods-producing economies will depend on the gradual uptick in commodity prices, while growth of the service producers will rely heavily on the performance of tourism and construction sectors. Overall, Caribbean governments maintained their commitment to fiscal consolidation and debt reduction in the medium-term. As such, total public debt fell slightly by 0.9 percentage points of GDP in 2017 to 70.8 per cent.
Nevertheless, fiscal challenges brought on by, inter alia, the impact of hurricanes Irma and Maria; less than robust government revenues in goods-producing economies; and reticence of some economies to reduce transfers and subsidies, contributed to a widening of the fiscal deficit. Monetary policy stances across Caribbean countries continued to be mixed in 2017 and the average deposit rate (1.93 per cent) in the subregion remain unchanged relative to the previous year, while average lending rates decreased. Moreover, there was a cooling of average rate of inflation in the Caribbean to 2.2 per cent when compared to 4.0 in the previous year. However, when, the influence of Suriname is removed, the observed increase in Caribbean-wide inflation by 1.2 percentage points to 1.7 per cent in 2017, was primarily driven by a combination of rising fuel and food prices, as well as improved economic activity in some countries.
The major challenges facing the subregion continue to be the high debt burden and the undiversified natures of its economies. As a result, it crucial that member states persist in their efforts to reduce public debt thereby creating the requisite fiscal space to invest in the necessary industrial restructuring, focusing on key sectors identified for export diversification. For these reasons, ECLAC’s debt for climate adaptation swap initiative provides an avenue for beneficiary countries to simultaneously address the challenges of high debt, climate change vulnerability and diversification.
UN Symbol: LC/TS.2019/6 - LC/CAR/TS.2018/2