Caribbean economy in review I – Is CBD in trouble?

Economic Columnist – Edwin Laurent

Caribdirect today launches a new column dedicated to reporting and discussing issues that can affect the Caribbean’s economy. We aim to help readers, at home and abroad to better follow and understand developments.

Other sites and publications already present news, comments and from pundits.  But deciphering, fact from opinion and making sense of the various and often changing policies and developments can be a daunting task.

The business person, student, most of us in fact; just want quick, reliable and independent information on decisions and developments that affects jobs, incomes and growth.

The economics column aims to be timely and accurate, but also independent, presenting factual information across the whole spectrum of views; not simply rehashing the orthodox or official line on policy. We leave it to you to come with your own conclusions on the merits or otherwise of the alternatives.

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We have no agenda other than to help the public be better aware of and understand the myriad regional and international forces that are shaping the Caribbean economy and determining the pace and direction of change. The column will not shy away from controversy or challenging topics.

What sort of news events will be covered by the column? The top stories that we would have featured in November are listed below. Some of them, we will continue to follow and explore.

• At the start of the month, the credit rating agency Moody’s, confirmed its downgrading of the region’s premier financial institution, the Caribbean Development Bank (CDB). Earlier, in June, another agency, Standard and Poor’s had already twice downgraded the CDB.

 The reasons are operational concerns and the underlying weakness in the  Caribbean economy. The downgrading is of concern not just for the reputation of the Bank but also the rates at, and ease with which, it can secure funds for regional development. Of course the CDB is not in trouble, its credit rating is still relatively high, a commendable Aaa.

•    On the commodity front the European Commission announced on the 8th November that it will boost its sugar stocks by 1.2 million tones, half of which will be imported. This increased demand will help stimulate the world market and is therefore good for Caribbean sugar exporters. On the same day the EU and ten banana producing countries, signed an agreement finally ending their 20 year banana dispute, which had, at its heart, the future of Caribbean and African banana exports.

•     In the UK, Justine Greening, UK’s Development Secretary, announced
  

  Justine Greening. Photo courtesy standard.co.uk

  that Aid to India will be cut essentially because it is too rich. If this policy takes hold, the Caribbean will lose out because it too is seen as not poor enough. But the question to be asked is, what is Aid really for? If it is just charity, a sort of almsgiving, then we can see why it should go only to the poorest. But wasn’t the idea of Aid, giving a ‘hands up’ the development ladder?

•     Whilst the pleas and protests of Caribbean Tourism Ministers and officials regarding the UK’s Air Passenger Duty have been falling on deaf ears in Whitehall, the EU listened to critics of its own equivalent, and on 12 November announced a freeze on its Aviation Carbon Tax.

•     The US November election outcome might well not have implications for aid and trade policies to the Caribbean, but with Romney’s economic management policies differing so sharply from Obama’s, the latter’s victory will have far reaching consequences for global economic recovery.

•     China also had its own ‘election’. It is still too early to tell what type of
  

  XI Jinping. Photo courtesy telegraph.co.uk

  leader Xi Jingping will turn out to be, but he is expected by March of next year to have secured control of the most levers of power held by a Communist Party leader since Mao. This one man will be overseeing an increasingly confident nation; expected, within the next decade, to overtake the US as the world’s largest economy. Already, China has been flexing its muscles.  It is seeking more and more, in institutions like the WTO and the IMF, to influence the agenda in line with its vision.

The Caribdirect economics column will report on issues, such as these developments above, with comment and analysis by academics, business persons and experts. Its aim is to be a dependable early warning system; so feedback from and engagement with readers will be essential. I look forward to your comments and feedback.