D.E.C.I.D.E.
Caribbean Economic Review and Outlook
Dr. Justin Ram
Director of Economics
February 24, 2016

Presentation Outline
• Part A: Global Economic Outlook
• Part B: Caribbean Economic Review and Outlook
• Part C: Vision and policy response

Part: A
Global Economic Outlook

Global growth > in 2016
Source: IMF WEO January 2016 Update

Uncertainty a toxic cocktail
Looking Down
• Geopolitical uncertainty
• Stock market turmoil
• Slowdown in emerging markets, especially China
• Currency volatility
• Low oil prices costing producers and financers
• Possible instability in Europe,
Brexit
• Increased risk of US recession?
• Zika virus
• El Nino
Looking up
• US unemployment rate the lowest since 2009
• Increase in US wages
• Low oil prices benefitting consumers
IMF recently revised down global growth for 2015 and 2016

Mixed fortunes closer to home
Source: IMF WH REO October 2015

Part: B
Caribbean Economic Review and
Outlook

Continued growth < comparators
Sources: IMF, ECCB and CDB. Data for 2015 are preliminary CDB estimates

BMC growth in 2015
Sources: BMCs, CDB preliminary estimates

Tourism: Most regional destinations saw continued recovery in stayover arrivals
Growth (%) in Stay-Over Arrivals 2010-2015*
Source: Caribbean Tourism Organisation *2015 figures as at month indicated

Commodity prices are falling: mixed fortunes and risks for BMCs
Source: IMF, World Gold Council

The fiscal story
Sources: IMF, CDB estimates

Trade: foreign exchange reserves

Unemployment is still high
Source: BMC Statistical Offices

Low productivity does not bode well for growth
Source: The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/

Still tough going for businesses
Source: World Bank Group

Here’s why we score poorly in
Doing Business rankings
Source: World Bank Group

Logistics: BMCs lagging behind
Source: World Bank Group

What’s the 2016 Outlook? CDB forecasts regional growth of 0.3%
Source: CDB

Where are the risks in 2016?
• Global economic downturn
• Political uncertainty in Venezuela
• Continued warming of US/Cuba relations
• Potential threat of Zika virus
• Commodity exporters need to make difficult decisions
• US Presidential election
• Olympics in Rio de Janeiro
• Reduction in correspondent Banking relationships
• Weather-related events

Part: C
Our Vision for the Caribbean:
Time to D.E.C.I.D.E.
and Policy
Recommendations

Our Vision for our Caribbean economies
What do we want our Caribbean economies to be?
Dynamic, Export-oriented, Competitive, Inclusive, Diverse and Environmentally-resilient economies (D.E.C.I.D.E.)
This requires:
 Private sector led growth
 Educated and flexible labour force
 Regionally integrated
 Government as facilitator and efficient regulator
 Energy security

Policy Actions: DECIDE
1. We need a strategy that will allow us to take advantage of technological innovation, to identify and encourage higher productive activity.
2. At the same time we need to improve the Investment Climate: make it easier for private sector to thrive (doing business reforms).
3. Labor Market Reforms: increase flexibility, freedom of movement, participation and productivity.
4. Human Capital Development: Investment in quality education for all, with emphasis on science, technology, engineering and mathametics (STEM).

Policy Actions: DECIDE
5. Fiscal Consolidation: Fiscal rules, increase efficiency of revenue collection and expenditure, prioritise capital investment, reform of subsidies.
6. Although we have low fuel prices we still need energy reform that will improve our energy security, through use of RE in energy mix and greater EE (oil and non-oil producers).
7. Policy environment that assists MSMEs such as access to credit.
8. Targeted and affordable social protection, this is applicable social safety nets, transfers and subsidies.

Policy Actions: DECIDE
9. Maximise regional integration and take advantage of free trade agreements such as EPA and seek new agreements.
10. Improve Regional Transport and Logistics: increase efficiency of movement of people and goods across the region.
11. Mandate building and infrastructure codes to improve resilience.
12. Measures required to minimise the spread of new diseases.
13. Improve the level of national savings to support investment and fiscal buffers.

Thank you for your attention
Questions?