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Overview of Macroeconomic Issues Facing the Caribbean

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A general overview of the macroeconomic issues facing the Caribbean as presented by Ian Durant, Deputy Director, Economics, CDB on July 10, 2017 at a conference titled, 'Chinese Renminbi in the Caribbean-Opportunities for Trade Aid and Investment,' held at the Hilton Barbados Resort.

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Overview of Macroeconomic Issues Facing the Caribbean

  1. 1. GENERAL OVERVIEW OF MACROECONOMIC ISSUES FACING THE CARIBBEAN Ian Durant Deputy Director, Department of Economics 10 July 2017
  2. 2. THE REGIONAL PICTURE
  3. 3. POVERTY UNACCEPTABLY HIGH IN MOST COUNTRIES Source: Statistics Offices 58.5 (2012) 41.3 (2009) 37.7 (2008) 36.1 (2006) 36.0 (2009) 30.2 (2009) 29.0 (2005) 28.8 (2009) 22.0 (2012) 22.0 (2002) 21.8 (2009) 19.3 (2009) 18.0 (2006) 17.0 (2007) 16.5 (2009) 9.3 (2001) 5.8 (2009) 1.9 (2008) HAI BZE GRE GUY MON SVG SLU DOM TCI BVI SKN BAR ANT TT JAM BAH ANG CAY Poverty Rates (% of Population below Poverty Line)
  4. 4. LOW GROWTH ENVIRONMENT Source: CDB estimates, IMF, UN (6) (4) (2) 0 2 4 6 8 10 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Real GDP growth (%) 2006 to 2016 World Advanced economies Emerging market and developing economies CDB BMCs Other SIDS
  5. 5. 2016 ECONOMIC GROWTH Source: Statistics Offices, ECCB, CDB estimates 3.8 4.3 0.0 1.6 -0.8 -0.6 3.2 1.0 1.9 3.3 1.1 1.4 1.3 3.0 0.9 2.0 -10.4 -5.7 4.4 -1.3 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 2016 GDP Growth (%)
  6. 6. COMMODITY PRICES STILL RELATIVELY LOW & RATE OF VISITORS ARRIVALS HAS DECLINED 50 60 70 80 90 100 110 Gold Index: Jan 12 – May 17 0 20 40 60 80 100 120 Crude (US$/bbl) Jan 12 - May 17 Stayover Arrivals Sources: IMF, CTO 2014 2015 2016 +5.9% +4% +1.7%
  7. 7. IN GENERAL, UNEMPLOYMENT HAS NOT FALLEN SUFFICIENTLY Source: Statistics Offices - 5.0 10.0 15.0 20.0 25.0 BAH BAR BZE CAY JAM SLU TT SUR % Unemployment Rate 2004 2010 2016
  8. 8. FDI HAS VARIED, WITH NO SIGNIFICANT INCREASE Source: UNCTAD 0 0.1 0.2 0.3 0.4 0.5 0.6 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % USDMillions Caricom: Inward FDI 2000 - 2015 Inward FDI Share of World FDI (RHS)
  9. 9. KEY TO A GOOD INVESTMENT CLIMATE Source: World Bank Group Country 2017 2016 Difference 2016- 2017 NZ 1 1 0 SIN 2 3 1 MAU 49 42 -7 JAM 67 65 -2 SLU 86 78 -8 TT 96 92 -4 DOM 101 95 -6 BZE 112 110 -2 ANT 113 107 -6 BAR 117 115 -2 BAH 121 120 -1 GUY 124 140 16 SVG 125 123 -2 SKN 134 127 -7 GRE 138 131 -7 SUR 158 155 -3 HAI 181 180 -1 Regional Average 120 117 -3
  10. 10. REMITTANCES CONTINUING TO INCREASE GRADUALLY…. - 1,000 2,000 3,000 4,000 5,000 6,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 USDMillions Total Inward Remittances 2000-2016 Source: World Bank
  11. 11. …AND ARE STILL SIGNIFICANT 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% ANT BAR BZE DOM GRE GUY HAI JAM SKN SLU SVG SUR TT Remittances as a Share of GDP 2016 Source: World Bank
  12. 12. HIGH DEBT ACROSS BMCs Source: Statistics Offices, Central Banks Debt as a % of GDP 2015 2016 Change in % Primary Balance (% of GDP) Real GDP growth BAR 140.4 145.3 4.9 -5.0 1.6 JAM 124.8 120.3 -4.5 7.7 1.4 ANT 99.1 93.6 -5.5 7.0 4.3 BZE 81.7 90.4 8.7 -1.1 -0.8 DOM 85.5 87.7 2.2 0.0 1.0 GRE 91.7 83.4 -8.3 5.3 1.9 BAH 66.9 69.3 2.4 0.4 0.0 SLU 65.4 66.4 1.0 2.2 0.9 SKN 70.6 65.6 -5.0 1.9 3.0 TT 50.0 56.6 6.6 -4.1 -5.7 SUR 43.5 55.5 12.0 -5.3 -10.4 GUY 48.3 49.6 1.3 -2.0 3.3 ANG 24.6 44.3 19.7 3.3 3.8 HAI 30.1 33.6 3.5 -1.0 1.1
  13. 13. DAMAGE FROM EXTREME WEATHER EVENTS Country Year Disaster Damage (% of GDP) Belize 2000 Storm 33 Grenada 2004 Hurricane 200 Guyana 2005 Flood 36 Dominica 2009 Hurricane 35 Haiti 2010 Earthquake 121 Saint Lucia 2011 Hurricane 34 Dominica 2015 Flood 96 Source: EM-DAT, IMF
  14. 14. DE-RISKING AND ACCESS TO GLOBAL FINANCIAL SERVICES Source: IMF
  15. 15. CBR Withdrawal Key Drivers AML/CFT Sanctions Profitability High Risks Impacts Trade Remittances Financial Stability
  16. 16. CHANGE IN TRANSACTIONS AND CBRs SWIFT Volume (% change) SWIFT Value (% change) CBRs (% change) Antigua and Barbuda 4.0 1.9 -12.6 Bahamas 23.8 -38.5 -15.1 Barbados 13.4 -50.8 -13.6 Belize -44.6 -44.2 -16 Cayman Islands 20.1 -31 -9.9 Dominica 3.4 -14.3 -9.7 Grenada 19.1 13 13.5 Guyana 15.2 -21.2 -0.2 Haiti 26.2 10.9 -11.8 Jamaica 38.5 35.4 13.7 St Kitts and Nevis 12 4 -18.3 Saint Lucia 10.9 6.7 1.8 St Vincent -14.1 -21.4 -1.8 Suriname -8.7 -15.6 -11.3 Trinidad and Tobago 14.9 -1.4 -21.8 Source: FSB
  17. 17. FOREIGN CURRENCY RESERVES BELOW BENCHMARK LEVEL Benchmark 3.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 BAH BAR BZE GUY JAM SUR TT ECCU MonthsofImports 2014 2015 2016
  18. 18. REGION EXPECTED TO GROW IN 2017 Source: CDB forecasts, IMF 3.1 3.4 1.4 1.1 2.2 2.3 3.2 3.2 2.7 3.5 2.3 2.1 1.7 3.5 0.7 2.5 -1.2 1.0 4.3 1.7 5.2 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2017 GDP Growth (%)
  19. 19. THANK YOU

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