Most Honorable Prime Minister Portia Simpson Miller
Honorable Minister of Finance Peter Phillips
President Warren Smith
Deputy Managing Director Min Zhu
Director, Western Hemisphere Alejandro Werner
Dear Partners and colleagues,
It is a pleasure to be here today and be able to share some thoughts about how to move forward a sustainable growth agenda for the Caribbean.
It is often forgotten that before the last global financial crisis hit, people in the Caribbean benefited from the region’s steady economic progress, improving health, education, and standard of living. The Caribbean region’s GDP per capita increased six fold in the last 3 decades and poverty has been reduced. For instance, in Jamaica, poverty rates dropped almost 20 percent in two decades.
However, the global financial crisis exposed the fragility of the Caribbean region. When the global financial crisis hit in 2008, Caribbean nations experienced declining or negative growth, and as a result unemployment increased.
This, together with weak safety nets, reversed some of the hard won social gains as poverty levels increased, reaching almost 40% of the population. Lack of fiscal space meant that governments were not able to cushion these declines with counter cyclical stimulus programs; and where they did, they did so at the cost of further worsening primary balances.
Minister Philips already mentioned that the effects of the global crisis have lasted longer in the Caribbean than other regions of the world. And while South American countries enjoyed the arrival to the trade scene of large commodity importers such as China, and benefited enormously from positive terms of trade. That did not happen in the Caribbean where onn the contrary, terms of trade worsened.
On top of this, the region is exposed to natural disasters, an additional concern that builds more vulnerability. For this reason, the Caribbean cannot be analyzed with the same criteria than other regional economies.
For instance, size matters. Smaller economies tend to be concentrated in a few sectors.
Therefore regional integration designed to take advantages of economies of scale and public sector modernization are critical.
To tackle this situation, several countries including Jamaica and Grenada have already embarked upon significant reform programs. And progress has been made. But, here I join Deputy Managing Director Min Zhu recognizing the impressive efforts that the authorities of the Caribbean have done in order to achieve this. At the same time, the complexity of identifying which reforms are needed to ignite economic growth has also been highlighted.