Most regional economies are likely to record continuing high employment, sluggish financial activity and modest growth – between one per cent and 2.5 per cent – in 2012.
New president of the Caribbean Development Bank (CDB) Dr Warren Smith told reporters at a regional news conference at the Bank's headquarters in Barbados last week that borrowing member countries, "will continue to face binding constraints, including under-diversified economic structures, under-developed infrastructure and a lack of private sector competitiveness, as well as weaknesses in the area of financial regulation and supervision, and macroeconomic management".
In 2011, he said, the Bahamas, Belize, Jamaica, Dominica, Grenada and Montserrat grew between one and five per cent, while Barbados, British Virgin Islands, Cayman Islands, and St Lucia grew by less than one per cent.
Trinidad and Tobago, St Kitts, St Vincent, Anguilla and Antigua experienced negative growth.
MINING
Smith says Guyana and Jamaica led the way in 2011 in the mining sector.
"Guyana benefitted from rising prices in bauxite and gold and Jamaica from improved prices in minerals and the reopening of some plants that had been mothballed during the early parts of the recession. Our information is that massive investments are being made in several types of mining in Guyana. Guyana is an exciting prospect."
He added that oil production declined in Belize due to problems with its wells, and oil and gas production in Trinidad and Tobago declined due to maintenance work by one major producer.
"Guyana is poised to become one of the largest producers of oil in the Caricom region," he said.
AGRICULTURE
The Caribbean Research and Development Institute (Cardi) has been given a grant by the CDB to explore how technology can become more entrenched in agriculture production, said Smith. This is against the backdrop of a review of performance for 2011 which saw Belize, St Lucia and St Vincent suffering setbacks due to recurring crop disease and/or natural disasters, while Guyana, Dominica, Jamaica, Grenada were able to capitalise on higher food prices.
"There are some exciting developments in protected agriculture. In Dominica, Jamaica and Barbados there are more and more greenhouses. This represents the infusion of technology into the production of agriculture which lays the basis for better integration of our agriculture with some other sectors like tourism which depend on reliable supply and quality."
Smith said protected agriculture does well at high altitudes and the Bank has asked Cardi to look at how this can be addressed in the context of the Caribbean's topography.
MANUFACTURING
Across the region, this sector contracted or stayed flat in 2011.
This, said Smith, was due to reduced demand and declining competitiveness in light manufacturing in most countries.
"Countries with large agro processing and mineral refining capacity benefited from rebounds in commodity prices, for example, sugar and rice in Guyana and sugar and citrus production in Belize," he said.
Trinidad and Tobago, meanwhile, recorded growth in non-oil manufacturing.
The construction sector across the region benefited from post disaster reconstruction in Haiti, St Lucia and St Vincent.
The Bahamas and St Kitts conducted renewed investment in tourism related activities which boosted their construction.
EMPLOYMENT AND INFLATION
Three large members of the CDB experienced double digit unemployment rates last year: The Bahamas, Barbados and Jamaica. Both Barbados and Jamaica recorded approximately 12.8 per cent unemployment.
The region experienced spikes in inflation but Smith said inflation was "generally under control". He said a petroleum levy introduced in Anguilla and a Customs surcharge led to a spike there; Barbados increased Value Added Tax (VAT) from 15 to 17.5 per cent; St Kitts and Nevis introduced a VAT; Jamaica, St Lucia, and Trinidad and Tobago saw declines due to exchange rate stability in Jamaica and slowdown in demand in Trinidad and Tobago; and St Lucia introduced fuel tax concessions and subsidies on basic foods.
TOURISM
Eight of the 12 major Caribbean tourism destinations experienced growth in stay-over arrivals in 2011. The best performers, according to Smith, were Anguilla, Cayman Islands, Barbados, and Jamaica. Growth was slow in the Bahamas, Belize, Guyana, and St Vincent. There was no growth in Dominica, Montserrat, and St Lucia.
Tourism recovery, too, will be soft, said Smith, as demand is unlikely to strengthen in 2012.
"British Airways announced reductions in flight frequency to several regional destinations toward the end of 2011, citing the Air Passenger Duty imposed by the UK Government as an additional factor in slowing demand," he explained. "The hosting of the 2012 Olympics in London is also likely to weigh on demand for travel in the UK and other European markets, whereas the [US] Presidential elections in November could potentially have a similar effect on US demand."
He recommends urgent reforms in economic management, including public financial management and the development of statistical capacity to ensure efficient allocation of resources.
"At the same time," he said, "priority must be given to the development and maintenance of well-targeted social safety nets to minimise the fallout from fiscal consolidation and external shocks for the most vulnerable in society."
Smith forecasts no improvement in foreign direct investment, which in turn reduces the likelihood of a boost to construction.
This is a consequence of the uncertain global economy and spillover from the Eurozone debt crisis, he said.
Haiti and Guyana, however, are expected to grow again by five per cent, consistent with their growth in 2011.
Haiti's growth is related to foreign aid for reconstruction following the January 2010 earthquake while Guyana benefited from increased prices in gold and bauxite.
