Research from the Inter-American Development Bank has shown that the small developing economies of the Caribbean were the most adversely affected by the global financial crisis of 2008 and its immediate aftermath.
Since then, economic growth in the Caribbean has been very low, inconsistent and unsustainable. With the exception of Guyana, the region gets a failing grade. Average economic growth in 2017 was only 0.6 per cent better than the contraction experienced in 2016.
Nearly all the governments continue to be seriously constrained in their macroeconomic policy by high debt-to-GDP, especially Barbados and Jamaica.
Suriname and Trinidad and Tobago are still trying to cope with the fall in oil and commodity prices with both countries still experiencing recessions in 2017.
Guyana is an exception in the region because of good fortune. Economic growth has been buoyed by strong gold prices and the prospect of income and tax revenues from oil extraction that is scheduled for 2020. Hopefully its traditional ethnic tensions will not derail the long-awaited development of the country’s enormous and varied endowment of natural resources.
The outlook is cloudy at best. The International Monetary Fund (IMF) has forecast economic growth of two per cent for Caribbean economies in 2018, though its forecasts are often wrong.
The projection of macroeconomic performance for next year conceals wide divergences between countries. Looking ahead the question is: Why is he Caribbean doing so poorly in absolute terms and compared to other small and developing economies, such as Central America and Mauritius, which are achieving growth?
Growth is not something exceptional when there is nascent economic recovery in the world economy, an expansion in international trade, and flourishing investment flows. Oil prices remain low compared to a few years ago. The US economy is doing well enough to sustain the tourist arrivals in the region and a healthy flow of remittances.
Some of the excuses for the failure of Caribbean countries to create sustainable economic growth of an amount warranted to improve the living standard of the majority of the populations lie in the following:
First, God made us too small to be viable. Empirical evidence of The Bahamas, the Cayman Islands, and Barbados in a bygone era all disproved this excuse.
Second, developed countries are consistently trying to push us out of any niche we find in the global economy, such as financial services. Nobody said the world was fair or that there would be perpetual preferential treatment for small countries. To be internationally competitive we have to meet global best standards.
Third, anaemic economic performance is a self-inflicted wound by poor economic management. That is why the IMF forces governments to do what is simply economic common sense.
Fourth, natural disasters have destroyed years of gross domestic product. The Caribbean is not the only region in the world prone to natural disasters on a perennial basis. We must make a better effort at economic and environmental resilience and to reduce dependence on fossil fuels.
All in all, Caribbean governments have a case to answer, and the people of the region have a right to expect and demand better economic management.