As inhabitants of the Caribbean looked on at the economic crisis in the US and the rest of the developed world, some economists predicted that we were insulated from similar financial problems. The ordinary man on the street, however, felt that economic problems were sure to hit us soon. One talk show analyst expressing the same view said, “It’s like a hurricane. We know it’s out there. We know it’s heading our way. But where and when it will make landfall- we are not sure. And above all else we do not know the damage that will be caused.” Although there was a lag between what happened economically in the developed world and the developing Caribbean, economists are now announcing that Caribbean countries are in a recession.
The governor of the Central Bank of Trinidad and Tobago has officially confirmed that the country is in a recession. The economy has contracted for the third consecutive quarter. He admitted that negative economic developments are causing havoc with the local economy. Unemployment has increased from five percent to 5.1 percent with about 5,700 job losses over the last few months within a population of 1.3 million. Also, the economy contracted by 3.3 percent in the first quarter of 2009, compared with growth of 2.4 percent in the first quarter of 2008. Even worse is the Central Bank projection that a greater decline is predicted to the end of 2009 and the slowdown in economic activity could continue until the second quarter of 2010.
The economic slowdown certainly fits the definition of a recession- a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters. Businessmen also readily add that as they experience a reduction in business activity, wholesale and retail sales, employment, industrial production and real income – the country is definitely in a recession. The announcement is as true for the oil-rich twin-island republic as it is for Belize, Jamaica, St. Lucia, the Bahamas, Barbados, and the rest of the Caribbean.
Belize Prime Minister Dean Barrow recently announced that his country is officially in the grips of an economic downturn which is affecting their ability to service debts. He quickly added that his country will not be seeking help from the International Monetary Fund (IMF) for fear of conditionality like wage freezes and layoffs that usually accompany loans. Mr. Barrow expressed optimism that as the US, their traditional trading partner, was beginning to experience economic growth, the Belize economy will benefit.
The other Caribbean islands that are heavily dependent on tourism are experiencing similar revenue losses due to a decline in tourist arrivals. The Jamaica based hotel chain, Sandals, has reduced staff to stem its losses. Similarly, in St Lucia, there have been job cuts in the hotel industry. Barbados has faced a four to five percent reduction in long stay visitor arrivals in 2009, with a projected no growth in 2010. The situation is expected to affect 14,000 jobs. Antigua and Barbuda similarly describe their all- important tourist sector as bleak.
Compounding the problem for the tourist dependent Caribbean islands is crime and the expansion of services provided by cruise ships that bring tourists to the region. Fears of muggings, inadequate law enforcement and inappropriate medical facilities have kept tourists on board giant cruise ships that are increasingly self- contained. They provide security that include closed- circuit cameras and metal detectors as well as Caribbean entertainment, food and other secure tropical experiences on board or at affiliated private resorts. As a result, much needed tourist dollars stay on board the vessels and do not benefit Caribbean islands that depend on tourism.
Many in the region are beginning to realize that Caribbean economies need to unite to weather the recession. Countries are also being advised to re-think, re-prioritize and chart a new economic path that involves effective management of the financial system with penalties and enforcement that ensures compliance. The average person is well advised to exercise financial restraint, eat less expensive home prepared meals and work hand in hand with coworkers to weather the economic hurricane that is upon us.