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Caribbean Region Quarterly Bulletin -January 2014
All countries except Barbados are showing signs of recovery. Persistent fiscal deficits have led to the adoption of further tax revenue measures and expenditure cuts in The Bahamas, Barbados, and Jamaica. In Suriname, authorities remain on course to reduce the fiscal deficit over the medium term.
Summary Of Recent Developments By Country
In The Bahamas, persistent weakness is evident in slow growth in tourism arrivals in the first 9 months of 2013. Unemployment thus remained high at more than 16 percent, and there was almost no annual inflation to October 2013. The fiscal deficit tapered in June–September 2013 as revenue collections increased alongside lower expenditures. The government plans to introduce a value-added tax in July 2014.
Barbados’ fiscal consolidation attempts for 2013–15 have fallen short of its initial targets resulting in the government’s announcement of additional expenditure measures amid falling GDP growth. International reserves are also falling, which presents a challenge for the government’s commitment to preserve the exchange rate peg.
The Guyanese economy remains resilient, registering continued healthy growth driven by buoyant commodity exports and expanding services. However, the fall in gold and rice prices presents a downside risk in the medium term, which can be mitigated through diversification, as envisioned under the Low Carbon Development Strategy.
Jamaica has met the structural and quantitative targets for the second review of the program with the International Monetary Fund considered by its Executive Board in December 2013. Implementation of the comprehensive tax reform has started with the tabling of two central legislations and IDB financial support in the area of fiscal reforms. However, Jamaica remains fragile, making the outlook dependent on avoidance of shocks and strict reform implementation.
The draft budget presented to parliament in October in Suriname projects a fiscal deficit of about 4 percent of GDP in 2014, similar to the 2013 target. H.E. Andy Rusland, the Minister of Finance sworn in the New Year, is in charge of execution while increasing private sector participation. Significant investments and tax reform are planned for the gold sector in the coming years.
Trinidad and Tobago
Growth in Trinidad and Tobago apparently resumed in 2013 as the nonenergy sector continued its recovery. Completion of maintenance works in late 2013 in the energy sector, as well as more investment after successful bid rounds for acreage, bode well for oil and gas production in 2014. Serious logistical problems in the Central Statistical Office have affected the production of timely employment and trade data, in particular.
Eastern Caribbean Countries
In the Eastern Caribbean Countries, most economies have shown signs of broad-based economic expansion amid low and declining inflation, and they are on course for continued expansion in 2014. The Eastern Caribbean Central Bank projects weaker tourism activity in 2013 overall, but many of the countries continue investing heavily in the sector.
Special Country Reports: Getting More Income From Abroad
In the special country reports for The Bahamas, Barbados, Jamaica, and the island of Tobago, we consider trends in the main export sector, tourism, in addition to recent policy options for the sector. For Guyana, we look at one of the main sources of external income: remittances from citizens living abroad. In Suriname, we consider the options for establishing fiscal discipline and attracting private sector participation in the country’s development amid increasing expectations.
Regional Supplement: Tourism, Finally Looking South
Travel and tourism directly accounts for almost 30 percent of GDP in the CARICOM countries, by far the largest sector in most countries. Tourism is the mainstay of economic growth and development for many CARICOM member countries.
Travel and tourism has earned its place as a major economic contributor in many Caribbean countries. Tourism adds value not only in terms of foreign exchange, but also in terms of supporting related sectors such as agriculture, construction, security, and export industries. Tourism also provides job opportunities. However, the global landscape for the sector has become more competitive and traditional source markets for the Caribbean are less dynamic.
This bulletin examines the tourism industry for CARICOM countries with an attempt to find new opportunities for trading partners. The report discusses some ideas for the Caribbean to take on this challenge through diversification, namely, through the creation of new market niches, improved airlift, and the reorientation of supply toward emerging markets. It also analyzes the economic viability of an IDB project to bring new visitors from Brazil (the so-called “Brazil air bridge.”)