On June 25th, IDB President Luis Alberto Moreno, made a powerful and well delivered keynote address for the Caribbean Growth Forum in Nassau to an audience which included the Bahamian Prime Minister Perry Christie and the majority of his cabinet, academics, businesspeople, academia, and government representatives (including Ministers) from throughout the Caribbean region.

He told his audience, gathered there as a partnership between the Inter-American Development Bank (IDB), the World Bank, the Caribbean Development Bank and Compete Caribbean, that job one for the Caribbean was to export more.

Critically, in a speech that could have been written for Jamaica, Moreno noted “For small, open economies facing chronic external imbalances and fiscal retrenchment, competitive exports are the only path to growth.”

That the Caribbean needs to diversify both its trading partners and its exports was also the key message at the recent launch of the Caribbean Aid for Trade Strategy in Port-au-Prince. As Moreno noted in his Nassau speech, in Haiti the issue was put even more starkly “the future requires the Caribbean to export or die”. In 2010, the Caribbean exported goods and services equivalent to 44 per cent of its GDP, compared to 77 per cent in Panama and 207 per cent in Singapore. He suggested the Caribbean begin its search for new trading partners with its faster growing Latin American neighbors, starting with increased air and maritime connections between both regions.

Secondly, Moreno emphasized the Caribbean has to set its fiscal house in order, as debt levels over 60 per cent of GDP can create a drag on economic growth, as do unsustainable fiscal deficits. He argued that the path to growth requires dealing with fiscal retrenchment and high debt levels today. “Many of your Latin American neighbors learnt this lesson the hard way”, but “fiscal adjustment can and should be pro-growth.”

Third, he noted that higher growth requires more investments in infrastructure, and that the Caribbean Aid for Trade Strategy highlighted that the region is significantly behind other competitors. Given their current public debt levels, he argued, most Caribbean countries will have to rely on the private sector to play a leading role in mobilizing the necessary financing. One proven, but underused (in the Caribbean) mechanism to achieve this is to promote public-private partnerships. This point that was emphasised by both Bahamian Prime Minister Perry Christie, and his Minister of Investments Khaalis Rolle, who mentioned a number of creative projects that they were looking to finance in this fashion.

Fourthly, Moreno emphasised that fiscal adjustments require stronger social safety nets. The global crisis had erased many of the gains made against poverty prior to 2008. The downturn left the poor with fewer resources to cushion a blow, so great care should be taken to avoid having the burden of the adjustment fall on the most vulnerable, a point frequently emphasised by Jamaica’s Prime Minister Portia Simpson Miller.

His fifth imperative was that productivity must increase. Moreno noted Caribbean productivity levels have been flat for many years but there are many reforms that can be carried out to reduce the cost of doing business and to make the region more competitive. As a Columbian national, he was also well placed to observe that “Not all of these measures are economic”, and that “At a meeting we held last week on crime and violence in the Caribbean, it was noted that the cost of insecurity can consume as much as 10 per cent of GDP.”

Finally, he argued, our renewable energy sources must be developed, as the Caribbean has some of the highest energy costs in the world.