Feb 2016 Financial News

Caribbean economies in ‘recovery mode’ – CDB

Feb 26, 2016

BRIDGETOWN, Barbados (CMC) — The economies of Caribbean countries are in a “recovery mode” even though they are still operating in a “somewhat topsy-turvy external environment,” the president of the Barbados-based Caribbean Development Bank (CDB), Dr William Warren Smith, said Wednesday.

Delivering the annual report on the current state of Caribbean economies, Smith made the point though he remains “guardedly optimistic about 2016”.

“Economic recovery remains fragile, but we expect that the countries will continue on an upward trajectory.”

The CDB president said that 13 of the bank’s 19 borrowing member countries (BMCs) should experience faster growth this year than they did in 2015.

But he noted, “Two of our stronger credits, Trinidad and Tobago and Suriname, will experience negative growth in 2016.

“Interestingly, all the services-dependent economies should grow, even if very marginally. This is a rebound from earlier years after the Great Recession. The two BMCs whose economies are expected to contract are heavily commodity-dependent and also represent a reversal of a trend which had emerged a few years ago,” he added.

Smith said as a result “one could conclude that Caribbean economies are in recovery mode and that would be a fair comment, except that it is occurring at a time of great uncertainty in what is emerging as a somewhat topsy-turvy external environment”.

“These external threats include the possibility of economic weakening in Europe and North America at the same time that China’s growth rate is slowing as it addresses internal structural weaknesses.”

He said that threats also loom ominously in the shape of the correspondent bank de-risking crisis, which portends challenges for the movement of money into and out of Caribbean economies.

Last week, Caribbean Community (Caricom) leaders who met in Belize said they had agreed to appoint a high-level advocacy group headed by Antigua and Barbuda Prime Minister Gaston Browne to tackle the corresponding banking fallout.

“This group will be charged with the responsibility to represent the interest of the region in addressing this issue, including an approach to the United Nations and the World Trade Organisation,” said Caricom chairman Dean Barrow.

“We are also talking about engaging directly with the regulators, particularly in the United States, and with the US Congress. We will meet with as many Congress leaders as the team will be able to interface with,” he said.

The Caricom leaders said several international banks, mainly in the United States and Europe, have signalled to client banks in the region an unwillingness to continue doing business with them.

The so-called de-risking by the global banks threatens to impact several critical services, including remittance transfers, and Prime Minister Barrow said that a letter, which he would sign, will also be sent to US President Barack Obama on the issue.

The CDB president said that in addition to these is the ever-present threat to economic and social infrastructure posed by natural hazards and climate change.

He said that in the face of a surfeit of threats to economic stability and growth, it is not surprising, therefore, that the term “sustainable” is “almost de rigueur in describing the menu of actions which need to be taken in managing Caribbean economies”.

Smith told reporters that the CDB had been able to assist its BMC’s withstand or build resilience to the myriad of threats through a wide range of products “which an institution like ours can deploy in support of a country’s efforts to build a more resilient and sustainable economic and social system.

“The judicious use of technical assistance, grants, capital and policy-based loans blended with our staff’s many years of experience working in Small Island Developing States (SIDS) enables CDB to partner with its BMCs to build resilience against a raft of different risks.”

He said last year, the region’s premier financial institution, approved 12 capital loans, three policy-based loans (PBLs) and 62 technical assistance (TA) interventions, totalling US$292 million, up from US$270 million in 2014.

He said loans totaling US$262 million were made to 10 countries, the largest beneficiaries being Antigua and Barbuda, Belize and Grenada.

 

Source:
Jamaica Observer
Friday February 26, 2016 

http://www.jamaicaobserver.com/business/Caribbean-economies-in--recovery-mode----CDB_52742