Economic growth for the Caribbean is projected to be around 3.8 per cent next year, the Economic Commission for Latin America and the Caribbean said yesterday.
This growth is, however, predicated on developments in the world economy—in particular the Eurozone crisis settling, China and India increasing their consumption and the United States resolving its impending fiscal cliff.
"The picture taking shape is thus one of slow overall growth and continuing uncertainty, which may worsen should geopolitical tensions disrupt the functioning of certain critical markets, such as the petroleum markets," the UN organisation said in its preliminary overview of regional economies launched yesterday at ECLAC's sub-regional head office in Port of Spain.
Caribbean countries are still on a fragile fiscal footing, and need fiscal reform along with external support to firmly gain sustainable fiscal consolidation paths.
The outlook did not rule out a lower growth prospect, given external risks.
"The resilience Latin America and the Caribbean has shown thus far would be more severely tested... a growth slowdown in the US would affect Mexico, Central America and the Caribbean," the report said.
It is expected that overall growth in the Caribbean will be slightly better than last year, although the impact of Hurricane Sandy may have some spillover effects into next year. This may see an increase in construction activity as well as an increase also in food prices, due to its impact on agriculture.
The region as a whole grew marginally relative to last year, with the goods producers posting 3.2 per cent and the service producers 0.4 per cent. Guyana, Belize and Suriname continue to post substantial growth rates buoyed up by high prices in gold and agricultural exports.
However, among the service producers, Anguilla, Montserrat, Jamaica and St Kitts and Nevis will post negative growth in 2013.