Smaller Caribbean Islands to excel in 2016
On February 26, President of the Caribbean Development Bank (CDB), Dr William Warren Smith gave an Economic Review for 2015 and an Outlook for 2016 at its headquarters in Wildey, St. Michael, Barbados. For 2015, St Kitts and Nevis, Grenada and the Turks and Caicos Islands showed 4 percent growth, due to improved tourism arrivals and increased tourism related construction. On the other hand, the region’s economic powerhouse Trinidad and Tobago grew by just 0.2 percent due to weaker oil and gas prices. The CDB’s president renewed calls for labour market reform, private sector led-growth, deeper regional integration and governments to act primarily as efficient regulators.
“We could say that 13 of the 19 borrowing member countries (BMCs), we would expect them to grow faster in 2016 than in 2015, but two of our stronger credits Trinidad and Tobago and Suriname will experience negative growth in 2016. Interestingly all of the service dependent economies should grow, even if marginally…” said CDB president Dr William Warren Smith, while explaining the downturn in the commodity-driven economies.
Warren Smith went to indicate that the regional economies are in recovery mode at a time of great uncertainty in what is emerging as a somewhat “topsy-turvy economic environment”. And he continued, “These external threats include the possibility of economic weakening in Europe and in North America, at the same time that China’s growth rate is slowing as that country addresses internal structural weaknesses.”
In a threat assessment, Warren Smith reminded the audience of the “ever present threats to economic and social infrastructure, posed by natural hazards and climate change, broadly defined”. He continued, “In the face of a surfeit of threats to economic stability and growth it is not surprising therefore that the term ‘sustainable’ is almost de rigueur in describing the menu of actions that need to be taken in managing Caribbean economies,”
For 2015, as the CDB continues to help the Caribbean countries deal with their economic challenges, it granted 12 capital loans, three policy-based loans and 62 technical assistance interventions in 2015, at a cost of US$292 million – a US$22 million increase over 2014. The main beneficiaries of these financial instruments were Antigua and Barbuda, Grenada and Belize.
“The operations of the Bank in 2015 were directed at long term, inclusive and sustainable growth, it was also targeted at good governance and the building of resilience,” said the CDB president. “The bulk of the financing was targeted at investments to strengthen and modernize social and economic infrastructure; to improve environmental management and disaster risk management; to build climate resilience, whilst promoting energy efficiency and renewable energy and to promote private sector development.”
For Trinidad and Tobago, the dollar depreciated by 2.4% in February 2016. Central Bank (CBTT) data show the February 2016 monthly average USD selling rate of TTD6.519, reflecting a 2.39% y/y depreciation of the TTD. The USD selling rate reached TTD6.57 on March 1st 2016. Official Reserves fell 11.5% y/y in January 2016 to USD9.66 billion, or 11.4 months of imports. CBTT foreign exchange injections reached USD175 million in February 2016.
Foreign reserves fell in all commodity exporting nations, and Barbados. Lower inflation was recorded across most countries, with many experiencing deflation, based on softer commodity import prices. Debt/GDP ratios increased in most countries, and the weighted average growth rate is expected to fall from 1% in 2015 to 0.3% in 2016, skewed by a 2.5% contraction expected for T&T in 2016.