by Kevon Browne
St. Kitts and Nevis (WINN): During their annual press conference on February 1, the Caribbean Development Bank (CDB) presented the economic performance of the Caribbean in 2021.
According to Ian Durant, CDB Director of Economics, in 2021, there was an estimated three percent growth in borrowing member states, which includes Anguilla, Belize, Dominica, Jamaica, Guyana, Trinidad and Tobago, and St. Kitts and Nevis.
The commodity-exporting economies grew by 2.7 percent, while the service exporting economies expanded by 3.2 percent.
Much of the expansion of the service exporting economies came from the resurgence of the Tourism product after the implementation of new travel protocols and vaccination programs in light of the COVID-19 pandemic. Within the Caribbean, tourism accounts for the majority of these country’s Gross Domestic Product (GDP).
Durant indicated that while the resurgence is positive, the tourism industry continues to be hampered by travel restrictions designed to curb the spread of the COVID-19 virus. There is a 65 percent reduction in tourists arrivals between January and September 2021 compared to the same period in 2019.
“Although most of the service exporting economies benefited from an increase in tourist arrivals, some of these countries maintained tight travel restrictions for most of the year that reduced arrivals. Of these, the Cayman Islands and Grenada managed to record positive GDP growth despite the fall in arrivals, while GDP fell marginally in St. Kitts and Nevis.”
The growth of the commodity-exporting economies resulted from Guyana’s production of crude oil and the growth of that industry by 19.9 percent.
Conversely, GDP fell in Trinidad and Tobago because of lower natural gas production, a substantial economic driver for the country and was expected to grow according to last year’s projections.
The consensus during the press conference was that 2021 was a better year economically than 2020, and the prospects for 2022 are looking up.
“Prospects for regional growth in 2022 are favourable. With growth projected to increase to approximately 9.1 percent. The projected upturn is dominated by Guyana, which is expected to grow by 47.5 percent, as output in the oil and gas sector continues to build momentum. Among the other commodity exporters, our resurgence in energy production is anticipated to alleviate supply-side constraints and lead to an increase in GDP in Trinidad and Tobago,” said Durant.
“Service exporting economies are forecasted to gain momentum growing at an average of 4.8 percent, reflecting the continued recovery of the tourism sector. However, sustaining the growth of tourist arrivals will depend on increasing vaccination rates, effective management of the pandemic without resorting to full and lengthy lockdowns and continued confidence of source markets in the protocols established for safe travel to the region.”
However, as we have seen during the start of the winter season, the service-based economies are at the mercy of what new variants emerge from the COVID-19 pandemic and how countries respond to such and how the economy responds to those decisions.
“Now, is subject to a number of downside risks that could lower growth prospects and affect fiscal out-turns. These include the emergence of new COVID variants that result in spikes in infection, illness, hospitalisations and death, inflationary pressures caused by supply chain disruptions that reduce purchasing power and global demand, heightened geopolitical tensions, rising interest rates, and of course, natural hazard events.”
To avoid the crippling effect the pandemic had on some sectors of the economy, the Director of Economics suggests that the region becomes more resilient in the social, production, financial, environmental and institutional aspects of society, primarily pointing out the need to diversify production and export options.
“At present, exports in the region are largely driven by a country’s natural resource endowments, whether tourism assets or mineral deposits, largely because of the lack of competitiveness of the economies. This has led to a situation where the largest export product accounts for more than half of total exports in many countries, and this creates an acute vulnerability.”
Durant ended his presentation by saying the economic recovery of the region continues in 2022, and the entire region must be cognizant that it is not business as usual; efforts must be made to strengthen and secure the region’s economic ecosystem against future threats.