Briefing | What is the growth projection of Caribbean and Latin America?
Economic growth in Caribbean and Latin American countries is expected to increase by approximately 2.6 per cent in 2017 after experiencing slower aggregate growth in previous years. Gross Domestic Product (GDP) has been low for the region in previous years impacted negatively by local innate handicaps, reform programme adjustment and global geopolitical occurrences including lower oil prices and lower revenue from low output in oil exporting Caribbean and Latin American countries.
This coupled with less than expected global demand and reduction in expected fiscal expenditure in the United States has minimised the performance of Caribbean and Latin American economies previous years. These economies are expected to rebound in 2-17, and average growth in the Caribbean region alone is expected to be anywhere between 1.5 and three per cent for the year.
Which countries are mostly affected?
Venezuela appear to be most affected, their economy contracted by an estimated 10 per cent in 2016 and is expected to contract by 7.4 per cent in 2017 and further by 4.1 per cent in 2018.
Venezuela is struggling to withstand the pressure arising from low oil prices given that the commodity is the main source of income for the country, accounting for more than 50 per cent of government revenues. Their economy is undiversified and oil accounts for more than 80 per cent of total foreign currency revenues. Low output and low international reserves translated into shortages of consumption goods in the country. Venezuela were, however, able to alleviate some of their national debt and reduce the gap between the imports and exports according the current account. Other oil exporting countries, for example Trinidad and Tobago, are also at a disadvantage as a result of low oil prices. Their economy contracted by 0.6 per cent in 2015, and contracted further by an estimated 5.1 per cent in 2016. Their economy is, however, expected to rebounded to marginal economic growth of 0.3 per cent in 2017 and further expand to 3.4 per cent in 2018. Although they are in crisis, their economy is not devastatingly affected like that of Venezuela. Trinidad has a high foreign currency reserve cushion and national sovereign wealth fund that is one and half time the nation's budget. Suriname's economy is also expected to register negative economic growth of one per cent this year after their economy contracted by more than five per cent in 2016.
Which Caribbean and Latin America economies are doing well?
Panama economic growth forecast appears very well. According to International Monetary Fund data, the Panamanian economy expanded by five per cent in 2016 and is expected to expand by a further 5.8 per cent in 2017 and 6.1 per cent in 2018. The rapid growth expansion in Panama is as a result of the expansion of the Panama Canal.
Dominican Republic is also showing positive signs; economic growth is estimated 5.3 ad 5 per cent in 2017 and 2018 respectively. Costa Rica, as usual, displays consistency in their economic performance. They are estimated to grow by four per cent in 2017 and 2018. St Kitts and Nevis also appear to be doing well; their economy is projected to grow by 3.5 per cent in 2017 and 3.4 per cent in 2018. Guatemala is also expected to grow by 3.3 per cent in 2017 and 3.8 per cent in 2018. The key for these countries is to develop and maintain sustainable balance of payments, where the inflow of foreign currency is enough to offset the outflow.
Where is Jamaica's economy in all of this?
Jamaica's economy is forecasted to grow by two per cent and 2.4 per cent in 2017 and 2018 respectively. Growth has been hinged heavily on increase in aggregate spending in the United States, Jamaica largest trading partner whose economy is projected to increase by 2.3 and 2.4 per cent in 2017 and 2018 respectively. The Jamaican economy has received significant commendation for maintaining a high fiscal surplus, increased stock of international reserves and steady implementation of legislative and fiscal reforms that expected to boost growth in the near future farther. The Government's Economic Growth Council has estimated that in four years the nation's economy will be growing at an average rate of five per cent per annum. To achieve this there needs to more stability in output from different sectors.
This will require a first world level of economic coordination that third world country has never seen through its 50 odd years of independence.