AS I SEE THINGS: Handling our economic affairs
It is no secret that many countries in the Caribbean have been going through severe financial and economic crises for quite some time now. Despite strong efforts in a number of countries to try to bring our economic problems under control, the outcomes are not always consistent with the objectives we set ourselves. While this state of affairs may seem troubling to some, I firmly believe that as a people with strong resolve, we can certainly overcome our present difficulties if only we can find a way to properly handle our economic affairs. Strategy then becomes the key factor.
You see, not too long ago the world economy was thrown into chaos because of problems that emerged in the housing market in the United States (US). Consequently, global output declined, unemployment rose drastically, fiscal and debt problems engulfed many nations, and social distress set in. Countries large and small had little option but to search deep for solutions.
Some countries implemented massive stimulus programmes aimed at increasing national income and by extension reducing unemployment. That clearly was the case in the US. As a result, latest statistics from the US Labour Department now suggest that unemployment in that country has returned to its 2008 level even through the income levels of the jobs created have fallen a bit. In short, according to those statistics, the economy has finally produced all the jobs lost during the recent global financial and economic crisis.
On the contrary, other countries such as Portugal, Greece and the United Kingdom followed the path of austerity, hoping instead to stabilise their economies through massive cuts in public spending and increases in taxes where feasible to tackle what clearly were unsustainable fiscal and debt situations. Unemployment rose in the immediate period as expected but the economic policies should generate growth in the medium to long term.
Here in the Caribbean, countries such as Barbados, Grenada, Jamaica and St. Lucia have recognised that it cannot be business as usual and hence decided to undertake some economic reforms aimed mostly at correcting fiscal and debt problems. While Grenada and Jamaica have gone the route of structural adjustment programmes with the assistance and guidance of the International Monetary Fund (IMF), Barbados and St. Lucia have not.
Logically, it is way too early to undertake a proper assessment of the efficacy of the stabilisation initiatives in these countries. But, on the positive side, it is a welcome sign that like the United States and those European countries we in the Caribbean recognised that something had to be done to revive our ailing economies in the aftermath of the global recession and hence we acted accordingly.
And that indeed is the proper way to handle our economic affairs.
In a similar vein, when international agencies such as Moody’s downgrade our credit ratings or organisations such as the IMF provide independent analysis of the state of our economies, our strategic response should always be to determine what corrective measures can we put in place to resolve the issues brought to the fore. Attempts to ridicule those organisations will do us no good. Facing up to the real issues confronting us is once again the sensible way to handle our economic affairs. Do you doubt me?