Caribbean capacity to generate foreign exchange, investment and exports appears be to freefall, a senior official of the United Nations regional economic watchdog has suggested.
The deputy director of the Economic Commission for Latin America and the Caribbean (ECLAC) Dr Dillon Alleyne also raised concerns that the growth trajectory in the Caribbean was not expanding.
Delivering the main speech at the Central Bank of Barbados’ 39th Annual Review Seminar on Growth through the Re-Imagining of Traditional Economic Sectors at the Hilton Resort, Dr Alleyne said the region was at a crossroads.
He declared: “I make this presentation at a time when the region is at another crossroad and serious decisions must be made on how we go forward.
“We have made enormous progress, but many new challenges confront us, with the environmental ones led by climate change and natural disasters reminding us of our inherent vulnerabilities.”
In identifying ‘disruptive changes’ which were emerging in the Caribbean, Dr Alleyne confirmed the region’s ability to attract foreign investment continued to decline over the last decade Figures had also shown a shrinking capacity to export, he added.
He said: “Foreign direct investment, especially after the crisis in 2008 – 2009 is generally looking down.
“Now this is important because foreign direct investment is a source of foreign exchange, is a source of technology transfer and is a critical element of our development, so that is not good news, and the question has to be posed as to why there is this decline.
“Of course exports are the lifeblood of the Caribbean economies and what we see is a decline in the capacity to export.
“What we are seeing overall is a declining capacity to generate foreign exchange.
“Exports have fallen both at the so called intensive margin and the extensive margin.
“So the bottom line is that we are failing both in terms of new exports and also in terms of old exports.”
The regional economist explained that due to the fact that the structure of economies in the region had not changed dramatically, the composition of exports had also followed suit.
He noted that services in the Caribbean were mostly in tourism, with some financial services also offered.
Much of the goods exported was primary production, said Dr Alleyne.
“This is not news to us, but what it means is that the level of local value added is very minimal,” he said. “So all of these things combine to suggest why it is that our growth trajectory is not expanding.
“The implication of all of this is going to be low levels of employment or high levels of unemployment…[and] labour productivity has also been in decline.”
When compared to the Rest of Small Economies (ROSE), the Caribbean’s level of indebtedness was very high, the ECLAC official added.