Oct 2015 Financial News

IMF sees growth for region’s oil importers

Oct 07, 2015

The growth outlook has improved for oil importers in the Caribbean but the decline in the global price of the commodity will be a drag for exporters of oil such as T&T, the International Monetary Fund (IMF) said at Tuesday's launch of the World Economic Outlook (WEO).

Speaking at a news conference to launch the WEO at the IMF/World Bank autumn meetings at the National Museum in Lima, Peru, IMF official Gian Maria Milesi-Ferretti predicted growth of 3.8 per cent for the region in 2015 and 3.4 per cent in 2016.

Milesi-Ferretti, the deputy director of the IMF´s research department, said the reasons for the improving growth outlook for Caribbean oil importers were the strengthening in the US economy and the large decline in the price of oil.

"Yet, these economies still face growth challenges as they still have low growth and fiscal situations that are extremely precarious.Unfortunately with precarious fiscal situations the scope for fiscal policy to support growth is very limited," said Milesi-Ferretti.

At this point, he added, the choice has to be what is the best way to achieve a standard of fiscal consolidation that does not rely on cutting social expenditure and support for the poor and that is as pro growth as possible.

"That is what our direct involvement in the region has been trying to achieve," said Milesi-Ferretti, adding: "It is a difficult endeavour with low growth and high debt, which are not problems that can be solved rapidly, but improvements in the terms of trade thanks the decline in the oil price will help."

He said the decline in the price will be a drag for the oil exporters. Citing the success of the IMF`s extended fund facility with Jamaica, the IMF researcher said progress has been made and is being made for the Caribbean as a whole, and with the right policies, there was hope that the growth rates across the region could climb.

In presenting the WEO, the director of the IMF´s research department, Maurice Obstfeld, said the institution was reducing its forecasts for growth of the global economy in 2015 to 3.1 per cent from 3.3 per cent.

Obstfeld said: "With increased exchange rate flexibility, higher foreign exchange reserves, increased reliance on FDI flows and domestic-currency external financing and generally stronger policy frameworks, many emerging markets have increased their resilience to external shocks." He said: "Exchange rate depreciation has generally been a useful buffer for countries experiencing growth slowdowns—and has already been substantial-but could cause balance-sheet effects where there is foreign-currency borrowing."

(The author is on an IMF Fellowship, covering the autumn meetings of the IMF and the World Bank)

Source:
Anthony Wilson
Trinidad Guardian
Wednesday October 7, 2015

http://www.guardian.co.tt/business/2015-10-07/imf-sees-growth-region%E2%80%99s-oil-importers