Economic Survey of the Caribbean 2013: Improved economic performance with reduced downside risks

This survey posits that improving global prospects especially in the United States and Europe will mean opportunities for positive growth in the Caribbean due to increasing exports and renewed inflows from foregin direct investment and remittances. It points out that the response of the Caribbean economies to the global crisis has been asymmetric with the goods1 producing economies doing better than the service producing economies with respect to growth and their public finances. On the latter issue the region faces severe challenges as debt to GDP ratios in some countries are in excess of 100per cent. Such high debt burdens impact growth negatively through many channels. Among these are the upward pressure placed on domestic interest rates, and the decline in government capital spending which is often complementary to private investment. The survey also notes that the domestic private sector still remains risk averse and this together with depressed foreign direct investment has not promoted robust investment in the region, except for a few countries. For these reasons it suggests that private /public sector partnerships are a useful vehicle for jump starting private investment and allowing for investment to continue. In addition, with limited public resources available , such partnership allow some public functions to be pursued. The outlook for 2012 and 2013 is for modest overall growth in the subregion and this is contingent on improved demand in major export markets over this period leading to increased domestic investment and employment.