ECLAC predicts Caribbean will record its highest rate of growth since 2008

ECLAC predicts Caribbean will record its highest rate of growth since 2008

Business GrowthSANTIAGO, Chile, Wednesday July 29, 2015 –The Economic Commission for Latin America and the Caribbean (ECLAC) is projecting that Caribbean economies will grow, on average, 1.7 per cent this year – its highest rate of growth since 2008.

The new projections released today during a press conference in Santiago, point to 0.5 per cent growth in the wider Latin America and Caribbean region.

But giving a breakdown of how that growth would be recorded, the United Nations body said South America would contract by 0.4 per cent while Central America and Mexico would grow 2.8 per cent, and the Caribbean would expand 1.7 per cent.

ECLAC projections

The Economic Survey of Latin America and the Caribbean 2015 predicts that Panama will lead the regional expansion with a six per cent increase, followed by Antigua and Barbuda (5.4 per cent) and the Dominican Republic and Nicaragua, both with 4.8 per cent growth.

In its report, ECLAC indicated that the Caribbean has seen a marked improvement in its fiscal position, although the high level of public debt continues to weigh heavily on growth and investment.

“In the Caribbean, the improvement in the fiscal deficit seen in 2014 continued in the first quarter of 2015, as fiscal revenues rose by 0.3 per cent and spending fell by 0.1 per cent,” it said. The Commission noted that Caribbean countries are taking large strides to boost tax revenues, which will help them to close their fiscal gaps.

Slowdown in 2015 prediction

Upon presenting its most recent annual report, the regional organization called for vitalizing the investment process to resume growth and improve productivity in the region’s economies.

“Revitalizing growth in the short and long term requires boosting public and private investment at a complex time,” said Alicia Bárcena, ECLAC’s executive secretary.
“The economic slowdown is due to external and domestic factors,” the report noted.

“In the external arena, the global economy’s slow growth during 2015 stands out, particularly the deceleration of China and other emerging economies, with the exception of India,” it said.

And on the domestic front, “a contraction in investment along with the deceleration of consumption growth, coupled with other factors, are contributing to a reduction in domestic demand, which has been the main factor driving growth in recent years,” it said.
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ECLAC’s 2015 Report places increased emphasis on the importance of FDI for the Caribbean Region

On Wednesday June 27th, at the launch of the ECLAC publication of FDI in Latin America and the Caribbean 2015, Mr. Michael Milligan, Economic Affairs Officer for the Economic Commission for Latin America and the Caribbean (ECLAC) explained to a CAIC representative, amongst representatives of organizations in the private and public sector, that flows of Foreign Direct Investment (FDI) towards Latin America and the Caribbean declined 16% in 2014 to total $158.803 billion dollars. This result reverses the growth trend seen during the last decade – with the exception of declines in 2006 and 2009 – since a further reduction is forecast for this year.

In 2014, FDI inflows were affected by the region’s economic deceleration and lower prices for its raw material exports.

Worldwide, FDI fell 7% in 2014 versus the previous year, although inflows to developing countries rose 5%, mainly due to Asia’s performance. The participation of Latin America and the Caribbean in these global flows reached 13%, the document indicates.

The document explains that Caribbean countries offer numerous incentives to companies to attract FDI, including exemptions on income tax and customs duties. The report recommends that these benefits’ usefulness be reviewed as part of a coordinated promotion policy.

For the first time, the flagship report dedicates an entire chapter to FDI in the Caribbean, thus placing increased emphasis on the importance of FDI for the region.

The Caribbean receives higher amounts of foreign direct investment (FDI) when compared to other developing economies. [Read more]

 

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