Less than 1% growth expected
A REGIONAL ECONOMIST who monitors Barbados and other Caribbean countries expects the economy here to grow by less than one per cent this year.
Speaking during a recent Global News Matters’ Caribbean Economic Outlook 2016, which was released online, Royal Bank of Canada’s group economist for the Caribbean, Marla Dukharan, categorised Barbados as one of the region’s “slower growing economies”, something which she expected to continue this year.
“We have our fastest growing economies in the Dominican Republic and St Kitts . . . the Dominican Republic being driven by domestic consumption, being driven by the fact that it’s a largely diversified economy and also benefitted from lower oil prices and tourism,” she said.
“St Kitts and Nevis [is based on] largely construction and citizenship by investment. Then we have some of the slower growing economies. Grenada is estimated to grow around three per cent, Guyana is going to soften a little bit to maybe grow around two per cent, Aruba probably around two per cent.”
She added: “Much of the [Eastern Caribbean will grow by] between one and two per cent. Jamaica between one and two per cent, the Bahamas, Barbados . . . I’m guessing would be less than one per cent. Trinidad is likely to be the only [regional] economy that will contract this year as it had last year.”
Speaking about the wider region in the context of the International Monetary Fund’s global outlook. Dukharan said “Latin America and the Caribbean was the only subregion in the global economy, according to the IMF’s statistics, that saw a contraction, it is estimated, in 2015”.
“So we are looking at all other sub regions in the global economy seeing positive growth except Latin America and the Caribbean and that’s largely driven by the fact that commodity prices have softened and Latin America most of those countries are commodity exporters.
“Brazil is in a recession and Venezuela is in a deep recession and so this is driving the overall average growth. It doesn’t mean everybody is contracting but the overall average is down.”
The economist said 2016 would be another challenging year for the Caribbean economically, and pointed to major policy shifts, security and climate change as the “three major themes affecting the global economy and by extension the Caribbean economy”.
“In terms of policy shifts, for me the largest one that has had an impact on us in the Caribbean so far is the US tightening fiscal policy and monetary policy. What that has done is it has caused the US dollar to strengthen, because interest rates are going up, and because the US dollar is seen as a safe haven as well,” she explained.
“Last year we saw the US dollar strengthen by about 8.3 per cent, according to Bloomberg’s US Dollar Spot Index. It means that all the currency pegs in this region are pretty much strengthened against all of the other major currencies in a similar fashion because of that peg to the US dollar.”
She also expected China’s economic challenges to also affect the world economy, and as a consequence the Caribbean economy. Low oil prices would also impact the region, positively for countries like Barbados and negatively for countries like Trinidad and Tobago and Venezuela. (SC)