CDB expects real recovery in 2011

The Caribbean Development Bank (CDB) says it expects regional economies, which were adversely affected by the global recession in 2009, will begin to show real signs of recovery next year.

'In 2010, growth is expected to return to some of the global economies that contracted in 2009, but the recovery of regional economies is not likely to take hold before 2011," the bank said in its newly released annual report.

"Economic recovery in 2010 is largely predicated on the timing, pace and magnitude of the incipient global recovery, with recovery in the region expected to lag behind that of the major world economies by a few quarters."

The CDB 2009 report notes that tourism-dependent Borrowing Member States (BMCs) were particularly troubled by the global recession, which resulted in double-digit declines in most major destinations.

In the case of Anguilla, real Gross Domestic Product fell by more than a quarter, after a prolonged period of high construction-led growth that was fuelled by foreign direct investment.

"Antigua and Barbuda and the Cayman Islands also registered declines that were in excess of five per cent, while the real output contraction among most of the other BMCs was between one per cent four per cent," the report says.

It also notes that "the associated impacts on regional economies have been so severe that some governments have had to seek extraordinary external financing to mitigate the effects on foreign exchange reserves and liquidity levels in the banking system, as well as to improve fiscal and debt sustainability".

Specifically as it relates to Jamaica and Barbados, the CDB report added that one outcome of the unfavourable fiscal outturns was the downgrading of these countries' credit ratings and outlooks.

"Such downgrades, together with the continued tightness of global financing conditions, have limited access to international capital markets somewhat."

However, the bank acknow-ledged that the news was not all doom and gloom for regional economies last year.

While preliminary estimates indicate that economic output contracted in most regional economies in 2009, four borrowing member countries - Belize, Guyana, Haiti, and Montserrat - registered positive GDP growth, the bank said.

- CMC