Consolidated Caribbean Economic Growth for 2013
GDP Growth for the Caribbean and Caricom
Economic forecasts point to positive GDP growth throughout the region for 2013. Haiti will lead the region this year, with leading institutional forecasts pointing to GDP growth ranging between 6.0% and 7.0%. The following chart highlights Caribbean economic growth forecasts for 2013, recently published by the cited institutions.
GDP Growth for the Eastern Caribbean Currency Union
The Eastern Caribbean Central Bank (ECCB) recently published forecasts for 2013 growth. The ECCB anticipates that growth will turn positive to +1.44% this year, before strengthing to +2.21% in 2014.
Key Risks for Caribbean Economic Growth
- Vulnerabilities to the global economic recovery – The United States and Europe remain key source markets for Caribbean tourism and imports, as well as a destination markets for the Caribbean export products. Continued fiscal woes in these regions and weak economic activity could impact demand for consumer goods, commodities and tourism. Developments in East Asia will also gain increasing importance, as Caribbean countries continue to strengthen bonds with this region.
- Weather conditions – Tourism, agriculture and related downstream activities are all exposed to climate conditions in the region. Favorable conditions can provide upside to forecasts, while events such as hurricanes, tropical storms and drought can lead to a contraction in economic activity particularly in these sectors.
- International commodity prices – External balances are heavily exposed to vulnerabilities in international commodity prices. Imports, including fuel and food products, are consistently drivers of inflation throughout the region and impact both consumer demand and raw material prices. Meanwhile, exports, including coffee, sugar, gold and other mined products, are often more limited in their capacity to generate foreign currency earnings by prices than by volumes. Furthermore, for commodity exporters, the impact trickles down to incomes and fiscal balances.
- Capacity to manage fiscal balances – Fiscal reforms within the Caribbean economies will continue to impact consumer demand, as well as inbound investment. Fiscal adjustments remain critical in order to provide the region with the solid fundamental base to spur sustainable economic growth and long-term development.
- Credit quality – Banks continue to make the necessary adjustments to strengthen their balance sheets. Local economic growth is a key factor driving improvement of credit quality metrics, and a slowdown could translate into a deterioration of credit performance.
- Competitiveness – Caribbean governments continue dialogue around strengthening the capacity of the region’s products to compete in domestic and global markets. The ability of regional governments to create firm policies, incentives and programs offers the region a window of opportunity to boost economic activity.
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