While saying for weeks that some commodity-rich Latin American economies such as Brazil could overheat, the International Monetary Fund (IMF) has no such fears for the Caribbean, the pace of whose recovery is somewhat muted.

"Caribbean growth is expected to remain subdued. We are, however, expecting that it will pick up," said Gilbert Terrier, senior adviser in the Western Hemisphere Department of the IMF, at the Kingston launch of the fund's Regional Economic Outlook for the Western Hemi-sphere, held at the Bank of Jamaica on Wednesday.

"This year, growth will be close to zero, but next year, it could yield some two per cent, and this is a positive development."

It gives a cross-country perspective on growth in the Caribbean, with major emphasis on the role of tourism and debt.

Caribbean countries are among the most indebted countries in the world, and this, Terrier said, either limits or does not allow space for fiscal stimulus.

Terrier noted that the recovery will be a weak one and highlighted Jamaica as one of the countries that fared well during the crisis.

"Recovery in the Caribbean should be there next year, but it is a recovery that cannot be very strong," Terrier remarked in his presentation on the outlook for the region.

Some recovery is already being seen in tourism, one of the main foreign-exchange earners for some countries in the region.

Jamaica and the Dominican Republic, Terrier said, behaved better during the crisis in terms of tourist arrivals than some of their peers.

"One of the reasons Jamaica fared better is because it reacted quickly in terms of prices," said the IMF senior adviser.

"What we have found is that tourism is highly sensitive to prices, and Jamaica was able to lower prices by five per cent, which increased its tourist arrivals," he said.

Jamaica was projecting growth of 0.6 per cent this year, but is likely to revise that forecast to reflect the impact of the west Kingston unrest and state of emergency in May/June and the storm rains of September/ October when Finance Minister Audley Shaw goes to Parliament with a revised budget in a few months.

Important findings

The two shocks were said to have cost J$13-18 billion and about J$13 billion in losses, respectively.

Other important findings Terrier pointed to in the new IMF report include the extent to which Caribbean countries are able to open themselves up to tourism from other parts of the world, such as South America and Asia.

Concurring, Dr Shelton Nicholls, deputy governor of the central bank of Trinidad and Tobago in a presentation at the same forum, said that one of the Caribbean's problems is the inability to diversify and maintain flexi-bility in production.

"A major shift in traditional markets is needed. Instead of focusing on USA and Europe, focus should be placed on places like China, India and Latin America," said Nicholls.

Over the last 40 years, with average growth of just 2.2 per cent, the IMF report also indicated that the Caribbean countries have lost ground against other fast-growing emerging markets and other developing countries.

The IMF has revised growth for Latin America to 5.7 per cent for 2010, while projecting a decline in 2011 within the range of 4-4.5 per cent.

The growth prospects for the Caribbean were presented in the context of how regional economies are affected by events in the more advanced economies.

"With weak demand from advanced markets, slow remittance inflows and subdued tourism, there will be recovery next year - but slow," said Terrier.

"The future of the Caribbean lies in its effort to improve productivity and competitiveness in the tourism industry and willingness to reduce high debt levels," the report said.

sabrina.gordon@gleanerjm.com

'Jamaica fared better because it reacted quickly in terms of prices'

- IMF adviser