Effects of Global Crisis
June 15, 2009 No. 16/09-G CDB PRESIDENT TELLS INTERNATIONAL AUDIENCE ABOUT EFFECTS OF GLOBAL CRISIS ON CARICOM President of the Caribbean Development Bank, Dr. Compton Bourne, says the global crisis is transmitted to CARICOM countries through international trade in goods and services, capital flows and migrant remittances. He made the comment while addressing a Plenary Session on Global Financial Crisis: Uncertain Recovery at the International Economic Forum of The Americas Conference of Montreal on June 11, 2009. According to Dr. Bourne, the Caribbean is especially vulnerable to external economic shocks because of (1) its high trade exposure; (2) the concentration of exports on a few commodities and services including Tourism and international financial services; (3) reliance on a few export markets; (4) the importance of direct foreign investment and foreign aid in the region; and (5) the substantial role of migrant remittances in improving living standards for many households. This structural vulnerability is amplified by extremely high levels of government debt in most countries. The Tourism industry has been severely affected because tourists to the Region are primarily from the United States and Europe where the greatest declines have occurred in employment, personal incomes and wealth, and in credit. The CDB President reported to the conference that the outlook for 2009 is a 7% to 10% reduction in visitor arrivals in most Caribbean destinations. In the mining and energy sectors, the collapse of international prices for petroleum and methanol, and alumina and steel, combined with falling global demand has caused plant closures or reduced output in Guyana, Jamaica and Trinidad and Tobago. Dr. Bourne also stated that Construction activity has slowed substantially in response to postponement of investments in hotel plants, visitor condominiums, domestic residential accommodation, and public capital expenditures. The fiscal situation has deteriorated. The balance of payments has worsened. As a consequence, economic growth is projected to be negative in 7 countries in 2009. The more seriously affected are the Bahamas expected to decline by 4.5% in 2009, Barbados expected to decline by 3.5%, Jamaica with a projected 2.6% contraction, and Antigua and Barbuda with a 2% contraction.