Caribbean countries must turn to other export and tourism markets to cushion the potential impact of a recession in the United States, an official from the Economic Commission for Latin America and the Caribbean said on Tuesday.

Neil Pierre, director of the subregional headquarters for the group known as ECLAC, said the Caribbean also faces risks from depressed tourism demand as US consumers try to save money and reduce their remittances and Foreign Direct Investments.

"The US market attracts over 50 per cent of the region's exports and as such, a downturn in demand would dampen export demand from the Caribbean, leading to lower foreign exchange earnings at the same time that the region is afflicted by high food and fuel prices," Pierre said at a meeting of the Caribbean Development and Cooperation Committee, an ECLAC affiliate.

"There is, therefore, a pressing need to devise policies to cushion the impact of the fall-out from these events through such measures as export diversification to Europe, Asia and Latin America, and where possible, improved savings both by the public and private sectors and strengthened financial sector regulation to avoid risks to institutions that are highly exposed to the US market."

Pierre said Caribbean economies overall recorded a slower rate of economic expansion in 2007 compared to 2006, mainly because of slower growth in tourism and construction.
For the Caribbean region as a whole, ECLAC estimated the economic growth rate fell to 3.9 per cent in 2007 from 5.6 percent in 2006.

The slowdown was substantial in Antigua and Barbuda, Belize, Dominica, St Vincent and the Grenadines and Trinidad and Tobago.

Pierre said fiscal imbalances and high debt levels in a number of Caribbean countries were major concerns.
With debt to gross domestic product ratios exceeding 100 per cent in some countries and debt servicing costs in excess of 30 per cent of exports, Pierre said the debt overhang presents a serious challenge to fiscal management.

Rising food prices and inflation could also undermine many advancements that have been made in living standards.

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