GIVEN?THE?MAGNITUDE of the challenges that most countries have been confronted with over the past two to three years, it is critically important for world economies to begin making progress toward sustained growth and development in 2011.
Growth and development is essential to restore consumer and investor confidence in domestic economies as well as to inspire individuals who are willing and able to work to pursue meaningful employment opportunities.
While the achievement of this key objective ought to be the principal focus of all countries – small and large – individuals, business entities, trade unions, other social partners and governments would have to be prepared to make tremendous sacrifices for the good of their respective nations. Hence, collective responsibility for recovery in the global economy has to become the order of the day.
Evidence from most international organisations shows that some countries and regions have logically rebounded much faster than others in 2010. And that simple fact makes recovery in the global economy in 2011 a much more intriguing phenomenon.
In the context of small, open economies like those in the Caribbean, most of our governments continue to blame the slowdown in the global economy for many of our economic difficulties. The problems for our regional economies have been compounded by weak performances in the United States and other major Western economies in particular, to which Caribbean countries are connected through trade in general.
Growth prospects for Caribbean countries are so heavily dependent on recovery in the world’s leading economies, such as the United States and Britain, that 2011 promises to be yet another extremely challenging year for the region. But some growth can be expected. Why?
I would be the first to admit that despite the many advances in statistical and econometrics techniques, economic forecasting still presents major challenges for economists. Getting it right is not easy!
Nonetheless, many institutions, such as the International Monetary Fund and the World Bank, continue to predict outcomes for the global economy year after year, which many policymakers tend to be guided by.
With that caveat in mind, I am, however, satisfied that Morgan Stanley’s characterization of a “tale of two worlds” in 2011 is most appropriate.
In assessing the global economic outlook for 2011, Morgan Stanley’s Joachim Fels sees “robust growth in [emerging] economies trumping the creditless, jobless and joyless ‘BBB recovery’ (bumpy, below-par, brittle) in the mature economies. Within the latter, US economic growth should again top European growth, especially now that the tax deal between President Obama and Republican Congressional leaders has been approved by Congress and will be effective soon”.
Clearly, there is some optimism that world economies will rebound in 2011 and we in the Caribbean have to position ourselves to ensure that our economic fortunes improve in line with growth in the global economy, irrespective of how small.
Since economic projections are meant to be wrong by definition, nothing should be taken for granted. Hence, every country in the Caribbean must continue to use appropriate domestic policies to supplement any positive spillover effects arising from anticipated recovery in the global economy.
The efficacy of those domestic policies will to a large extent shape Caribbean economies in 2011.
