Brighter outlook for Caribbean economy in 2004

Thursday, December 18, 2003

NEW YORK, USA: According to a United Nations report, the Caribbean regional economy is expected to grow by 3.5% in 2004, leaving behind the "lost" six-year period that went before, and gradually entering into an expansionary cycle.

The economy of Latin America and the Caribbean grew by 1.5% in 2003 but, in contrast, the region's per capita GDP remained flat at 1.5% below the 1997 level. The lowest point of the cycle came in the first quarter of 2002, after which the economy began to make a mild recovery. 

This brighter outlook is in part a reflection of the more favourable international environment. The reduction in sovereign risk ratings from their peak levels of September-October 2002, the improvement in raw material prices, the expansion of tourism and the beginnings of an upswing in non-oil exports to the United States are the main positive impulses coming from the international economy. 

The stronger domestic positions achieved by the countries of the region are also significant, however. After six years of turbulence, most of the countries are emerging with fiscal and monetary policies well in hand and with more competitive exchange rates; even the economies that were overtaken by severe crises have already started to pick up. 

The six years of negative per capita growth caused social damage that will take time to reverse. 

It appears that the projected growth cycle will be stronger in those countries that have managed to reconcile improved economic governance with better political governance and weaker in those where the domestic political situation exhibits greater vulnerability. On the external front, the recovery of the world economy suffers from disequilibria that will have to be addressed primarily by the more developed economies.

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