Caribbean & Central America - March 2017 (ISSN 1741-4458)

*** CONTINUED GROWTH PREDICTED FOR JAMAICA. An International Monetary Fund (IMF) team visited Jamaica from 20 February to 3 March. The mission concluded that following seven consecutive quarters of growth, the economy is on track for 1.7% GDP growth in FY2016/17. Growth will improve further in FY2017/18 to 2.1%. Employment is said to be improving “steadily”, but it is still high at 12.9%. The FY2017/18 budget is projecting a primary surplus of 7% of GDP. On the external front, the current account deficit is down to around 3% of GDP.

*** CARIBBEAN BRACING FOR INCREASE OF DEPORTEES FROM US. The prime minister of Antigua and Barbuda, Gaston Browne, has warned that deportations under the new US administration led by President Donald Trump are likely to increase.

Following a summit in St Kitts in early March, Browne warned that the issue had economic consequences as well as security ones. He said: “I think from a security standpoint our major concern is the hardened criminals. Clearly [with] those who would have overstayed the issue now is to reintegrate them back into society, to find jobs for them. It means that economic growth would have to be a priority because we no longer just have to deal with school leavers, many of whom are struggling to get jobs in our respective countries, we have to now deal with the influx of deportees.”

St Kitts and Nevis prime minister Timothy Harris added that the region was hoping for some sensitivity and help from the US in dealing with this influx, but he did not sound over hopeful of receiving this. He said: “Will we get help from the Trump administration? We will wait and see.”

*** DOWNGRADE FOR BARBADOS. On 7 March, Moody’s Investor Service downgraded the long-term bond and issuer rating of Barbados to Caa3, saying: “We assess the likelihood of a credit event in the near-term as very high, given lack of fiscal adjustment and increasingly limited financing options.” The Moody’s downgrading followed a similar move by Standard & Poor’s a few days earlier and the firing of the central bank governor, DeLisle Worrell, on 24 February, which spooked financial markets. The yield on government bonds rose above 10% in response.

At the end of 2016, the debt-to-GDP ratio was above 110%. The deficit for the fiscal year beginning this April is budgeted to be 4.4% of GDP.

*** TOWARDS A CLOSE ELECTION IN THE BAHAMAS. The Bahamas will hold a general election within the next few months, and polls indicate a close result. According to private polling by the ruling Progressive Liberal Party (PLP), it has 14 seats marked down as wins against 11 seats marked down as wins for the opposition Free National Movement (FNM). It says that the remaining 14 seats could go either way.

In the meantime, the IMF has said that the restarting of construction work at the troubled Baha Mar mega-resort should begin to boost economic growth. The resort is now due to open on 21 April.

An IMF team was in The Bahamas from 7-13 December. It concluded that “structural impediments continue to constrain” the economy, and that to support stronger growth and job creation “policies should focus on implementing structural reforms to improve productivity and competitiveness and shore up the economy’s resilience to natural disasters”.