The territories of the Caribbean earn a significant part of their income from tourism, financial services, commodity exports and remittances. Due to the adverse impact of the global economic crisis that began in 2007 and extended into 2010, GDP growth has remained relatively lack-lustre for many of the territories, averaging less than 1% in 2010 and 2011. More recently, constrained by a difficult external environment and fiscal consolidation in many of the territories, the International Monetary Fund (IMF) has projected that output will expand by about 1½ % in 2012 (compared with ½ % in 2011). Tourist arrivals continue to recover tempered by the weak employment conditions in the main tourism markets. Inflation remains in tandem with global developments, at low single digit levels.
The region faces significant challenges however attributable to high public debt levels and from adverse terms of trade, due to high oil prices which continue to weigh on growth. Fiscal consolidation efforts continue in earnest within the region with one or two of the territories complementing their consolidation efforts with market-friendly debt restructuring. With commodity prices rising, in particular the price of gold and oil, commodity exporters in the region such as Guyana, Suriname, and Trinidad are projected to grow by as much as 4.7% in 2013, while Haiti is expected to lead the region in growth of about 8% in 2012, reflecting the continued reconstruction efforts after the 2010 earthquake.
Widening external current account deficits within the region remains a concern, particularly for the tourism intensive territories, with these external imbalances being financed by foreign direct investment which is slowly rising, as well as official flows, which includes funds from the IMF. Many of the region’s territories also benefit from concessional loans via Venezuela’s Petrocaribe programme which helps to mitigate the adverse impact of rising oil prices for some countries.
|The Caribbean: Key Economic Indicators 1|
|Real GDP growth (%)||0.8||0.5||1.6||2.0|
|Inflation (end of period) (%)||3.9||4.6||2.9||3.1|
|Current Account Balance (%)||-14.7||-14.3||-15.5||-15.1|
|Gross Public Debt||91.7||91.7||92.4||91.2|
|Sources: IMF, World Economic Outlook|
|1 Simple average of The Bahamas, Barbados, Belize, Jamaica, and the ECCU member states.|