BRIDGETOWN, Barbados, CMC – The chief economist for the Latin America and the Caribbean region at the World Bank, William F. Maloney, Wednesday praised Jamaica over its economic policies as well as urging Guyana to explore new strategies to prevent the departure of its highly skilled nationals.
Maloney was speaking during a webinar titled “Wired: Digital Connectivity for Inclusion and Growth,” which examined the growth and economic prospects of the regional economies amid the challenges of inflation, high-interest rates, and slow growth in major economies.
The Washington-based financial institution said that Caribbean countries are small, open economies, extremely vulnerable to natural disasters and global economic shocks, given a reliance on tourism and commodity exports.
It said the coronavirus (COVID-19) pandemic gross domestic product (GDP) contracted as much as 16-20 percent in some countries in 2020. The World Bank said uneven recovery started in 2021, with growth rates ranging from about one percent to 15 percent.
In 2022, the recovery continued at an uneven pace, with growth rates between four and 15 percent. The World Bank said as recovery continues, levels of debt to GDP started to trend down for most countries.
It said rising price levels and a challenging global environment pose significant challenges as countries work to strengthen fiscal balances, revitalize growth, and build resilience against natural disasters to help cope with climate change.
Maloney told reporters during the webinar that over the last ten years, Jamaica “has done some superhuman lifting in terms of policy,” saying, “If you look at those debt numbers…Ja”.
He said this is mainly due to the “epoch system of involving many elements of civil society and ensuring transparency in the government’s spending programs, the tax program and how it manages the debt.
“So it is pretty impressive what they have done, and I guess that the social skills will be used for tackling other problems going forward,’ he said.
While he could not provide figures during the webinar as it related to Jamaica’s inflation, Maloney said there were still issues regarding the business climate and levels of education.
“I think we need to think what it means when we have very high levels of remittances in many island economies …and how that makes it harder, or we can leverage that for development,” he said, noting that “Jamaica exports a lot of skill labor for instance to the United States.
“That can be an opportunity, and it can also be seen as brain drain,” he added.
The World Bank said that Jamaica’s real gross domestic (GDP) is estimated at 5.2 percent for 2022 due to the continued rebound in tourism and agriculture.
“Jamaica’s real GDP growth is expected to average only 1.8 percent between 2023-25, supported by an expansion in tourism, mining, and quarrying activities. The fiscal account is expected to record an average surplus of 0.6 percent of GDP over the medium-term with stronger revenues underpinned by continued economic recovery,” the World Bank said.
In the case of the Bahamas, the World Bank said the economy grew by 14.4 percent in 2022, slightly less than in 2021 (17 percent), driven by the recovery of services, particularly by tourism, which has almost returned to pre-pandemic levels.
It said the economy is expected to grow by 4.3 percent in 2023 and at about 1.7 percent after that.
In the case of Barbados, the economy grew at 11.3 percent in 2022 as the number of tourists reached pre-pandemic levels, allowing the recovery of hotel and retail activities, transportation, and real estate.
“After a pandemic-related interruption, implementation of the Barbados Economic Recovery and Transformation (BERT) plan has resumed. Growth is expected to slow to 4.6 percent in 2023 and then to four and three percent in 2024 and 2025, respectively, as tourism returns to pre-pandemic levels and fiscal consolidation will reign in government consumption,” the Washington-based financial institution added.
It said Belize experienced a sound economic rebound, fueled by increased tourism arrivals and tourism-related construction.
The World Bank said real GDP per capita surpassed its pre-pandemic level in 2022 after the GDP growth rate reached 15.2 percent in 2021 and an estimated 12.7 percent in 2023. It said the economy is expected to grow at 4.9 percent in 2023 and three to 3.5 percent in the medium term.
Dominica’s economic growth is estimated to remain strong at 4.9 percent in 2023 as tourism returns to 2019 levels and is supported by public investment and strong agricultural production.
Inflation reached 7.8 percent last year, mainly driven by fuel and energy prices,
The World Bank said short- to medium-term GDP growth continues to be driven by tourism aided by a robust public investment program. It said geothermal developments and an international airport should boost structural and potential growth.
Grenada’s economic activity and poverty reduction improved in 2022 and early 2023, as stayover tourist arrivals reached 87 percent of their 2019 level in 2022, and several construction projects were implemented.
The World Bank said real output growth is projected to moderate in 2023 to 3.9 percent, with an average of 3.7 percent over the medium term.
Guyana’s economy grew by 63.4 percent in 2022 and is expected to expand by 29 percent in 2023 and 38.2 percent in 2024, primarily driven by rising oil production including the expected introduction of the third vessel, Liza Prosperity, by the end of 2023.
It said growth in the non-oil economy was also strong, recording an 11.6 percent growth rate in 2022 and an expected 9.3 percent in 2023.
Maloney urged Guyana to be careful in dealing with the brain drain situation amid calls that the authorities there should use the revenues from the oil and energy sectors to pay increased salaries to public servants to avoid the brain drain rather than hiring foreign employees and paying them more.
He said that there are different ways of exploring a natural resource, including having a foreign entity take it over or employ the Norwegian model, “where you use the opportunity to raise the quality of your human capital and the quality of your education, research institutions and then you become full partners in the extraction process, and hopefully, you can leverage your natural resources to diversifying to other sectors.”
Maloney said the issue raised in the question regarding paying local professionals more to prevent the brain drain “is how do we prevent our people from leaving? I part of that overall strategy of how are we going to be partners in the exploitation of our new riches”.
Haiti’s economic performance continues to be hampered by political crisis and gang violence, and GDP is expected to contract by 2.5 percent.
The World Bank said the baseline growth is expected to firm up into positive territory with a rebound of 1.3 percent in 2024, assuming stabilization of the political context and improvements in security.
“However, with real GDP per capita growth of just 0.1 percent expected for 2024, the poverty rate – US$3.65 per day – based on 2017 figures will remain at 63.2 percent.
St. Lucia’s economic growth accelerated in 2022, driven by a buoyant tourism and construction sector.
The World Bank said stayover tourism increased by 79 percent from 2021 to 2022 and 11.5 percent in the first quarter of 2023, but it is still 16 percent below the 2019 level.
It said real output growth is projected to moderate to 3.6 percent in 2023 and will slow further over the medium, with an average of 2.9 percent.
Economic growth in St Vincent and the Grenadines is expected to continue strong at six percent in 2023 and 4.8 percent in 2024 as tourism continues to rebound and surpass 2019 levels.
The financial institution said poverty is expected to follow a similar trajectory. It said tourism growth over the medium term is expected to be further facilitated by the new airport, hotel, and resort facilities.
Inflation is expected to reach 3.6 percent in 2023 after gaining 5.7 in 2022, fueled by food and fuel prices. It will likely moderate to 2.3 percent in 2024 and return to more typical rates of around two percent as food and fuel prices normalize and domestic agricultural production resumes post-volcano.
A gradual resumption of economic growth in Suriname is expected in the medium term, at nearly three percent per year. However, significant challenges remain as the government tackles macroeconomic imbalances.
“Successful implementation of the macroeconomic stabilization program is critical to contain currency depreciation and inflation,” the World Bank said in its review of the Dutch-speaking Caribbean Community (CARICOM) country’s economic performance.
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