The overall dismal assessment of Caribbean economies in 2009, including the underperformance of the key sugar and banana industries against the backdrop of what the CDB report describes as “weather-related and other country-specific problems as well as the ongoing effects of trade preference erosion,” is however, punctuated by the identification of several bright sparks in the 2009 performance of the Guyana economy. The report lists Guyana as one of only four Borrowing Member Countries (BMC’S) – the remaining three being Belize, Haiti and Montserrat – that recorded positive growth last year. And in the face of what the CDB says were various “exogenous shocks” that threatened the soundness and stability of the regional financial sectors only Guyana and Belize are listed as having shown some measure of resilience.
Guyana is again singled out, along with Belize as being the main exceptions to a region-wide slump in the construction sector, a development which the Bank attributes to a fall-off in Foreign Direct Investments (FDI’s). In the cases of both Guyana and Belize the report says that construction activity was “a key factor” in the realization of overall economic growth, albeit at a reduced level.
While the report alludes to a sharp contraction in bauxite output in both Guyana and Jamaica it notes the strong 2009 performance of Guyana’s gold mining sector where total yield topped 300,000 ounces and secured record earnings for the sector.
Meanwhile, the report lists Guyana, along with Trinidad and Tobago and Jamaica as the three regional economies that maintained “relative exchange rate stability” attributing Guyana’s exchange rate stability to “a strong balance of payments performance.” The report attributed last year’s increase in net foreign assets to the twin factors of declining domestic credit and project loan inflows.
Amidst what the report says was a trend of deterioration in public finances in most of the region’s economies, Guyana is again singled out, along with Dominica as two Caribbean territories that recorded “higher current revenues and improved fiscal outcomes” resulting from a combination of expenditure restraint and tax reforms. According to the CDB report the general fiscal gaps in the economies of several Caribbean countries resulted largely from “salary increases, interest payments on accumulating debt stocks, rising transfers and subsidies and pre-election spending.” Fiscal performance in those countries in the region with narrow revenue bases was also affected by a decline in revenue, the report says.
According to the report, the relatively strong fiscal positions of the economies of both Guyana and Dominica have been supported by grant inflows, debt relief and/or concessionary loans. It notes that while some OECS countries have turned successfully to non-traditional donors such as Venezuela and China for grant financing, Jamaica and Barbados have had to endure reduced access to international capital markets as a result of the downgrading of their credit ratings.
Meanwhile, the CDB report sees more challenges ahead for the regional agricultural sector, notably the sugar and banana industries, which it says, are likely to result chiefly from a continued reduction of the guaranteed price for sugar arising out of the transition to the new Economic Partnership Agreement and the World Trade Organization banana deal which is likely to increase competition from banana exporters in Latin America. The report says, however, that the attendant Banana Accompanying Measures which the European Union is set to implement under the Geneva Agreement on Trade in Bananas could help boost regional competitiveness in the banana industry. Guyana’s rice industry, meanwhile, is likely to benefit from the duty-free and quota-free access to the EU market which it has been enjoying since January 1 this year.
