In June of this year, IDB’s President Luis Alberto Moreno delivered a thought provoking keynote address to the Regional Caribbean Growth Forum (CGF) Workshop that suggested the forecast for continued weak economic growth in the US and Europe was bad news for the Caribbean’s tourist industry, and that the Caribbean “cannot depend on an improvement in external conditions”.
The CGF initiative is a joint project between the World Bank, the Caribbean Development Bank and the Compete Caribbean Program, which in turn is funded by the Inter-American Development Bank, the Canadian International Development Agency and the United Kingdom’s Department for International Development. Other partners of this project are the University of the West Indies, The European Union, Caribbean Export and the CARICOM Secretariat.
Launched a year ago in Kingston, Jamaica; CGF national dialogues have been ongoing in 12 countries around the region and primarily focused on enhancing the logistics and connectivity of the Caribbean, improving the investment climate in countries across the region with great emphasis on enhancing the skills and productivity of all Caribbean people.
It is within this context that President Moreno’s dynamic presentation resonated deeply as he sought to put the Caribbean example in perspective by pointing out that just four decades ago, Caribbean per capita incomes were about three times higher than those of small countries in other parts of the world. Since that time, a low growth tendency has caused the Caribbean to fall behind.
Unless things change, that declining trend is likely to persist throughout this decade. An upturn in global economic activity would, like a rising tide, lift all boats. But given the present international conditions, it would not be enough to help this region preserve its living standards or catch up with its competitors.
According to the IMF’s most recent World Economic Outlook, global growth prospects remain subdued. This is particularly true of countries that used to be the international engines of growth, and who happen to be the Caribbean’s main trading partners. The new poles of high economic growth still have limited trade relations with the Caribbean.
Weak economic growth in North America and Europe is bad news for the Caribbean tourism industry. The outlook for offshore financial services is also uncertain. Countries that export commodities have a somewhat brighter outlook but depending on one or two exports introduce substantial volatility to the economies.
To sum this up, we cannot depend on an improvement of external conditions. Given that scenario, the Caribbean faces a choice: Sticking with the status quo or going for a grand agreement.
Doing nothing, of course, is not a viable option. It implies either spiraling debts or a fiscal compression with persistent low growth. Inevitably, it would lead to worse living standards for your citizens.
The alternative is reaching a grand agreement to put your countries on a path to higher and socially inclusive economic growth; an option that generates good jobs and resources to care for the vulnerable; a choice that offers hope.
A grand agreement does not mean a one-size-fits-all solution. There is no single set of policies that would allow the entire Caribbean to get on the path to growth. The solutions must be home-grown in each of the countries.
In that sense, the CGF is a step in the right direction. We need more national dialogues that will lead to broad accords and actionable plans. We also need to share ideas on how to move forward.