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Caribbean Region Quarterly Bulletin -March 2015
Being the first Quarterly Bulletin in 2015, this issue departs from its usual format of recent developments and analytical reports on specific topics for each country. Instead, we take a step back and look at the major developments in the world economy and the Caribbean in 2014. In addition, we explore possible major developments in the world economy and how they might impact the Caribbean in 2015.
Summary By Country
The Bahamas made important progress in 2014. In spite of challenges, growth accelerated in 2014 and the fiscal accounts improved. At the same time, unemployment remained high and Moody’s downgraded The Bahamas’ credit rating. Based on strong tourism, growth is projected to increase to over 2 percent for 2015. The introduction of the VAT in addition to the expected stronger economic performance should bode well for the fiscal outlook of the country. Finally, the external situation should improve if oil prices remain subdued.
2014 was a challenging year for Barbados, with real output growth at 0.3 percent, stagnant tourism arrivals, and fiscal austerity measures under the government’s consolidation program. Barbados’ medium-term growth outlook remains modest with the International Monetary Fund forecast suggesting growth of 0.5 percent for 2015 and 1.5 percent for 2016. However, Barbados will benefit from lower oil prices and the increase in airlift from the main markets—namely the United States and Canada. In addition, the government of Barbados estimates around US$150 million in private tourism sector construction for 2015.
In 2014, economic growth in Guyana was lower-than-expected at 3.8 percent owing to lower prices for key export commodities: rice, gold, and sugar. Parliament was suspended in November 2014 and economic confidence is expected to remain low until elections in May 2015, However, Guyana’s outlook remains positive because of continued expansion of the services sector, driven primarily by robust construction activity, and the commissioning of large-scale gold mines.
Jamaica’s outlook continues to improve despite ongoing challenges. The economy has grown 0.9 percent in FY2013/14 but is expected to grow only around 0.5 percent in the current fiscal year FY2014/15 because of the negative effects on agriculture of a severe drought in mid-2014. However, with a potential for lower oil prices over an extended period of time and a strong recovery in main trading partners, the outlook remains positive and risks to the upside have increased.
In spite of a slowdown, Suriname’s macroeconomic indicators remain strong with 2014 real GDP growth expected at 3.1 percent and inflation at 3.9 percent. In line with the outlook for commodity prices, growth in 2015 is expected at 3 percent, below its historical average of 4.4 percent. Suriname will hold elections in May 2015.
Trinidad and Tobago’s 2014 real growth was revised downward from 2.5 percent to 0.8 percent due to the fall in energy prices. 2015 could remain challenging as the low energy prices combined with uncertainty in major world economies could negatively impact the country.
Economic growth in the Eastern Caribbean Countries in 2014 benefited from increased tourism arrivals, a trend that is expected to continue into 2015. At the same time, banana exports continued to decline in 2014. The OECS countries overall are expected to benefit from lower oil prices. However, some OECS members depend on the special terms for oil shipments under the PetroCaribe agreement, which has become more risky as oil prices remain low.
Special Country Reports: Outlook for 2015
In the special report, we take stock of major developments that started in 2014 and explore how they might influence the development of the Caribbean in 2015.