On the back of difficulties in the global economy, The Caribbean economy experienced a difficult year in 2015. Caribbean countries being small open economies, were not immune from these effects. The commodity-producing countries saw sharp falls in growth. On the other hand, for those economies reliant on tourism, it was a relatively good year. A well as heavy reliance on overseas markets, 2015 demonstrated other characteristics of the region, such as vulnerability. Natural disasters in Dominica and the Bahamas caused significant damage and set back economic growth. Weather events particularly drought also affected agricultural production.
The reliance of the Region on Correspondent Banking Relationships (CBRs) with overseas banks was brought into focus, as the number of CBRs fell, threatening some financial systems and real economies. Thus far in 2016 (Jamaica and the Bahamas) are ranked higher in economic growth while Jamaica and St. Lucia are in the top half of 182 countries assessed. Significantly, Trinidad and Tobago grew by just 0.2%.
The main reason was declined in output of the petroleum industry, where falling oil prices caused a cutback in some exploratory activities; some oil and gas fields matured, and there were prolonged periods of maintenance activity. In Haiti, drought caused a decline in agricultural production. Manufacturing, especially apparel, grew strongly; but construction growth slowed following a decline in donor support for post-earthquake reconstruction and an increase in civil unrest. In Belize, crop production and livestock farming increased, while wood output and shrimp production fell.
Employment and Prices
Unemployment remains a concern across much of the region. In St. Lucia, despite recent economic growth and a number of targeted government programs, unemployment fell only slightly to 24.1%. Unemployment fell in Jamaica. In line with the economic recovery; in Belize, thanks to increased activity in agriculture and construction while In Trinidad and Tobago, unemployment fell in the first half of the year but rose in the second half as the economy slowed.
Assuming no significant downturn in the global economy and particularly in source markets, growth is expected to exceed 4% in both in St. Kitts and Nevis, as tourism and related investment remain buoyant. Tourism growth and related construction activity will also drive growth in Antigua, Barbuda, Grenada, British Virgin Islands, Anguilla, St. Vincent and The Grenadines, Cayman Islands, St. Lucia, the Bahamas, and Barbados.
Dominica’s growth will be driven by increases in construction, and wholesale and retail activity as the rebuilding effort following Tropical Storm Erika progresses. In Montserrat growth will be largely driven by public infrastructure investment. CDB expects growth in Jamaica to be about 1%, based on robust tourism activity and increased aluminum production, although output growth of some export crops could fall as prices stay low.
The Caribbean is mindful of the various global and regional risks. However, the measures identified above could make a significant contribution to stimulating higher rates of economic growth that are sustainable and inclusive, and help to reduce unemployment, inequality, and poverty. The diversity of the Caribbeans economies will reduce their vulnerability to outside influences leaving the splendor and leaving their essence intact.