SUNS4499 Tuesday 31 August 1999

Caribbean: A tale of mixed fortunes



St. George's, Grenada, Aug 23 (IPS/Wesley Gibbings) -- While many of their Latin American neighbours have been counting severe losses following the onset of the Asian Crisis in 1997, countries of the Commonwealth Caribbean have, in the count down to the year 2000, been licking economic woundsattributable to somewhat different, but just as disastrous circumstances.

The Crisis, accompanied by bad weather and indifferent world trading trends, delivered heavy punches to Latin America's economies last year reducing a 5.4% growth average in 1997 to 2.3% by the time the figures were tabulated earlier this year.

But even as Prime Minister Keith Mitchell has been painting a fairly rosy picture here, with economic growth expected to reach close to 6% over the course of 1999, it is not a scenario other members of the Caribbean Community family can easily relate to.

Barbados - long considered to be among the more stable economies in the region - is in the throes of an economic slowdown that threatens to erase the after-glow of a massive Barbados Labour Party victory at the polls in January.

All important tourism figures have declined for the first time in four years forcing projected growth figures downward and prompting acting Central Bank Governor Marion Williams to publicly express some concern.

In a recent quarterly report to parliament, Williams pointed to a $6.5 million increase in foreign reserves over the first quarter saying an expected increase in 1999 "will result entirely from government borrowing on the regional capital market".

Growth in the island's manufacturing sector has slowed, while the construction sector has seen decline from 20.7% in the first quarter of last year to 4.5% over the same period this year.

It is a condition Jamaicans can easily associate with. The island's economy has experienced, on average, negative growth of 1.7% over the last 26 years.

Over the past two years more than 50 financial institutions have scaled down their operations, closed their doors or have been taken over by the government as they were no longer thought to be viable.

The manufacturing sector is also in decline following the closure of several garment factories over the last year.

"The challenge facing all of us as Jamaicans is the generation of economic growth," Delano Franklyn, an advisor to Prime Minister Percival Patterson wrote recently.

Economic recovery is not, however, widely recognised as an achievable objective over the short to medium term. "What's next for me is how to get out of here," one senior financial manager told IPS.

It is a strategy long mastered by Jamaicans and the mostly likely to be embraced by those among the 123,000 in the 17-30 age group who can afford the airfare to Florida or New York.

"The concern for employment generation is at the heart of the government's efforts to promote investment, growth and productivity," Franklyn wrote. "As the economy grows, so will new employment opportunities emerge."

That is a pronouncement the Basdeo Panday administration in Trinidad and Tobago more confidently makes despite disturbing fluctuations in the price of oil that are said to have helped force the government, cap-in-hand, to the Central Bank on more than one occasion over the past 12 months.

Now, a month before the Finance Minister's budget speech and 15 months ahead of a general election, the government faces the challenge of continued oil price volatility, low commodity prices and growing demands on the public purse to satisfy needs in the social sector.

With foreign reserves at $1.2 billion, Finance Minister Brian Kuei Tung surmises that "we're moving pretty much along a good growth path", despite mounting pressure from the business community to lower taxes and upgrade the country's infrastructure.

"We believe we've turned a corner and shouldn't go back to a situation of a very serious deficit," Kuei Tung told the Senate last month. "But it's fairly marginal. Sometimes by the stroke of a pen a deficit can become a surplus or vice-versa."

Following setbacks at the recent local government polls, United National Congress (UNC) party groups have been put on election alert and are being asked to identify projects in their area that are most likely to attract electoral support.

The political antecedents to economic growth are however nowhere as stark as in Guyana whose recently sworn-in 35-year-old President is charged with reversing a decline that has accompanied persistent political strife.

Bharrat Jagdeo, whose ascent to leadership came just weeks ago following the resignation of Janet Jagan for health reasons, is presiding over an economy that has seen dramatic gains at the turn of the decade turn to ashes at the turn of the century.

Guyana's economy declined last year following average annual growth of 7.1% since 1990. The decline was attributed to a combination of deteriorating terms of trade, drought caused by the El Nino weather phenomenon and civil unrest which followed general elections in December 1997.

At the end of the first half of last year, the economy had registered negative growth of 2.4 percent.

A survey of the region's economic performance by the UN Economic Commission for Latin America and the Caribbean (ECLAC) suggested that for most countries of the Latin American and Caribbean region, "prospects for (fiscal imbalances in) 1999 do not permit hope for improvement".

It is not the kind of news economies of the Caribbean, diverse as they are, welcome too willingly and some have been wont to complain that the conditions for positive change simply do not exist.

"There is no level playing field," Mitchell said. "When we place our trade requirements in the context of the global village and the hard realities of liberalisation, the challenges ahead are indeed ominous."

It is not a point over which Mitchell finds many new detractors.