Arnold McIntyre Presentation at Caribbean Exporters Colloquium March 20-21, 2013

Transcription

1 Arnold McIntyre Presentation at Caribbean Exporters Colloquium March 20-21, 2013

2 Outline A Changed World and Region WIC Report Still Relevant?

3 A Changed World Global and regional economic conditions have changed markedly from the period when the Time for Action was written; Globalization still continues to evolve but we have passed through the worst financial crisis in over 70 years and this has given rise to a protracted global slowdown in advanced economies that has had a serious negative impact on the region; The region s tourism economies are very dependent on demand in these economies; has passed through a deep recession and coming out of it very slowly with sluggish growth and near term prospects do not suggest a strong rebound to pre-crisis growth rates; In contrast, with commodity prices remaining buoyant the region s main commodity exporters Belize, Guyana, Suriname and T&T are experiencing more robust growth.

4 The Caribbean: heavy dependence on major trading partners has impacted performance during the crisis indicated by the high correlation between Caribbean output and that of its major trading partners 6 Real GDP (Annual percent change) /11 recession great recession ECCU Other Caribbean 1/ Major Trade Partners 2/ Sources: IMF World Economic Outlook and staff estimates. 1/ Other Caribbean is an un-weighted average of Guyana, Jamaica, Suriname and Trinidad & Tobago. 2/ Trading partners is a weighted average of United States, United Kingdom, Canada and the Euro Area 4

5 A Changed World and Region The changing global landscape is also characterized by strong growth in the large EMEs China and India, export oriented Asia, also Brazil and Russia; Strong growth and economic progress is occurring in the EMEs simultaneously with sluggish growth and even stagnation in most of the advanced economies in North America and Europe; Caribbean has weak linkages with the dynamic EMEs so little growth impact.

6 WIC Report Still Relevant? Even before the crisis a number of diagnostic reports on the Caribbean noted that growth rates had been declining since the 1990s and identified the challenges and opportunities facing the region; Time for Action drew this to the attention of the policymakers and provided a comprehensive strategy for taking the CARICOM countries forward and deepening their unity; Many of those recommendations are still relevant today but disappointingly remain unimplemented.

7 WIC Report Still Relevant? The case for regional integration among small states remains valid Volatility, high fixed costs, small size and diseconomies of scale The core elements of the WIC report remain relevant WIC report articulated an export-oriented growth strategy and that is still the only option for small, open economies; Export diversification is still critical to achieving a higher sustainable rate of growth and employment services still offers great opportunities for the region. Does the changed global landscape and the relatively weaker economic conditions in the region necessitate modifications to the comprehensive policy framework spelt out in the WIC report?

8 WIC Report Still Relevant? The changing global landscape and the economic difficulties being experienced by the region provide another opportunity for introspection and strategizing; For most countries the near term economic objective is preserving macroeconomic stability whilst tackling deteriorating fiscal conditions, rising debt levels and financial sector vulnerabilities; Over the medium to long term the main goals of policymakers would seem to be reinvigorating growth, enhancing competitiveness and productivity, tackling financial sector vulnerabilities and providing adequate support to the poor and vulnerable groups.; Regional cooperation has a definite role to play in helping the region achieve these objectives.

9 WIC Report Still Relevant? Moving forward with a revamped strategy requires governments to strengthen economic and financial management at the national level An efficient public sector improves the government s implementation capacity and reduces costs; a strong fiscal position provides the space for the government to channel more resources to infrastructure development and strengthen social protection; a strong fiscal position reduces debt which is a drag on growth in some countries; and fiscal space is needed to support the pursuit of regional cooperation initiatives to complement national development efforts.

10 WIC Report Still Relevant? At regional level complete key elements of unfinished agenda and strengthen regional cooperation in provision of public goods vital to promoting growth; Complete the unfinished agenda: Notably Finish trade integration agenda with a common market and enhanced trade facilitation arrangements; Establish a simple, transparent scheme for increased labor mobility; Remove impediments to the establishment of regional enterprises (that is already taking place); Pursue diversified trading arrangements.

11 WIC Report Still Relevant? Regional policy coordination is an obvious area of economic benefit to the region and supports growth; Regional financial regulation and supervision; Harmonized policy to eliminate tax competition; Other possible areas include coordinated approaches to: climate change; energy policy (alternative sources); and developing new service exports e.g. cultural and creative services, professional services, health and wellness.

12 Thank You