Commodities beat tourism
TOURISM-DEPENDENT Caribbean countries will find it tougher to grow than commodity exporters up to the end of next year.
Real GDP growth in the tourism-dependent economies is projected to be 0.9 per cent this year and 1.4 per cent in 2013, according to the International Monetary Fund (IMF).
Tourist arrivals in countries, including Bahamas, Barbados, Jamaica, and ECCU members, are somewhat higher than in 2011.
"But weak recovery in advanced economies, and in some cases limited price flexibility in tourism activities, are keeping growth subdued," said the IMF.
However, prospects for commodity exporters, which include Belize, Guyana, Suriname, and Trinidad and Tobago, are somewhat better, with output projected to grow by an average of 2.7 per cent in 2012 and 3.7 per cent next year.
The IMF's new projections, which were released last week, placed growth levels at 0.6 percentage points lower than was envisaged in April.
The multilateral agency said that most Caribbean economies continue to navigate in a sea of elevated debt, weak external demand and unfavourable terms of trade.
What's more, it observed that fiscal consolidation efforts have waned somewhat, and public debt is now projected to average close to 95 per cent of GDP for the tourism-dependent economies by year-end.
Consequently, public debt would end up more than 15 percentage points higher than pre-crisis levels and broadly unchanged relative to last year.
Financial sector difficulties also persist.
Bank non-performing loans are high and rising in many countries, and non-bank institutions remain fragile.
"Looking forward, Caribbean countries need to gear policies toward reducing vulnerabilities," said the IMF. "Greater resolve is required in reducing public debt and in adopting structural reforms to boost growth and competitiveness.