In the Caribbean: IMF Says Weak Outlook

14 October 2011


IMF expects lower growth for tourism-driven economies like Barbados. Guyana and Suriname to benefit from higher gold prices

Recovery in much of the Caribbean, including Barbados remains weak. This is the view of David Vegara, Deputy Director, Western Hemisphere Department of the International Monetary Fund (IMF).

He also outlined that while prospects are better for mineral-rich countries, with Suriname and Guyana benefiting from record gold prices, expansion in tourism-based economies such as Barbados are expected to see a lower growth rate than previously projected.

Speaking to members of the public at the launch of the International Monetary Fund’s Regional Economic Outlook at the Frank Collymore Hall yesterday, he explained, “The recovery in much of the Caribbean remains weak, with downsize risk to growth. Greater resolve is required in bringing down high public debt levels and decisively addressing persistent weakness in the financial sector.”

Vegara reported, “The Caribbean region continues to struggle to recover from a long and protracted recession. Drags from fiscal consolidation and higher energy prices continue to constrain private demand, while the recovery in tourism flows remains tepid amid high unemployment in advanced economies.

“Tourism-intensive economies are projected to expand by an average of 11⁄4 per cent during 2011–2012, almost 1 per cent lower than anticipated six months ago… [For] Haiti, growth is estimated to reach about six per cent this year – well below the eight per cent projected back in April – as earthquake reconstruction efforts have been lagging.”

He also indicated, “A further slowdown in advanced economies would dampen the recovery and add pressure to an already heavy public debt burden. Meanwhile, further delays in resolving sovereign and financial sector balance sheets could lead to a generalised loss of confidence. The recent moderation in world commodity prices provides some relief to an otherwise difficult global and domestic environment.”

The IMF official suggested, “In this context, greater resolve is required in reducing public debt (which is up over 9 per cent of GDP since the crisis) and resisting fatigue in some countries, where pressure to increases wages and subsidies have intensified. Fiscal consolidation efforts should, to the extent possible, preserve growth and competitiveness by avoiding step cuts in infrastructure spending.”

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