Caribbean Development Bank projects average two per cent growth for region in 2015
The Caribbean Development Bank (CDB) is forecasting average regional growth of two per cent in 2015.
Economic expansion is currently being projected for all 19 borrowing member countries, with most set to once again grow by between one and three per cent, it said.
Preliminary estimates, the bank said, indicate that the regional recovery continued in 2014, with 16 of the CDB's borrowing member countries expanding during the year, driven mainly by tourism and construction activities.
The CDB, which called a press conference in Barbados last week to provide the regional update, said all borrowing members will see an uptick in performance during 2015, but not all in the region will see faster growth than last year. Montserrat, Dominica and Grenada are projected to develop at a slower pace.
The Turks and Caicos Islands is also expected to slow somewhat, although growing much faster than most countries in the region, the CDB said. The group of islands experienced accelerated growth of around four per cent in 2014, based on the recovery in tourism and continued investment inflows for mainly tourism- and real estate-related construction, which is expected to continue in the current year, the bank said.
Exceptions to the ongoing strengthening of the recovery in the region include Trinidad & Tobago, which slowed considerably to an estimated 0.5 per cent in 2014 due to "operational challenges and the significant drop in oil prices during the year which suppressed petroleum output, driving a decline in the mining and quarrying sector," the bank said in its annual publication, Caribbean Economic Review.
The lowest estimates for 2015 include the British Virgin Islands with projected growth of 0.6 per cent, followed by Dominica and St Lucia, both projected to grow at 1.1 per cent. Still, this represents some recovery for St Lucia and St Vincent and the Grenadines whose economies declined in the last year, negatively impacted by a severe storm early in 2014.
Prospects for Jamaica this year are slightly more optimistic, with last year's estimate of 0.8 per cent growth replaced by a projection of 1.4 per cent growth for 2015.
The CDB's Director of Economics, Justin Ram, suggested in his scripted presentation at the press conference that regional governments should take policy actions which have the potential to accelerate growth.
These include improving the investment climate by undertaking doing business reforms to make it easier for the private sector to thrive, as well as labour market reforms by increasing the flexibility and freedom of movement, and regulatory and governance reforms by improving transparency and accountability.
Ram also suggested that governments focus on improvement of regional transport and logistics, which should increase efficiency of movement of people and goods across the region and tap into the growth potential of global value chains via improved logistics.
In its post-briefing release, the CDB said that while its preliminary estimate of regional growth of 1.3 per cent for 2015 is slightly lower than the revised figure of 1.7 per cent for 2013, there is "cautious optimism" of further strengthening of the regional recovery.
The CDB said that despite falling commodity prices and other challenges that impacted mining and quarrying activity, some large commodity exporters were able to grow quite rapidly, although driven by the services sector in 2014.
Guyana, which grew by an estimated 3.8 per cent in 2014, is projected to improve to 4.3 per cent this year.
However, tourism-dependent Barbados and the British Virgin Islands stagnated for the seventh consecutive year in 2014.
Marginal growth was estimated for Barbados as weak performances in tourism, international business and construction were not enough to compensate for declines in manufacturing and agriculture.
Referring to the other major sector contributing to the regional recovery, the CDB said that continued expansion in construction activity in most borrowing member countries was primarily led by the private sector.
"Much of this was related to tourism and other commercial development as well as strong growth in residential building in some territories. Growth in the sector was also stimulated by public-sector capital investment in several countries," it said.