CBD predicts regional economic growth of 9.1% in 2022
(MENAFN-Caribbean News Global)
BRIDGETOWN, Barbados — The Caribbean Development Bank (CDB) projects gross domestic product (GDP) growth of 9.1% in its 19 borrowing member countries (BMCs) in 2022, accelerating the region’s economic recovery that began in 2021.
The favorable outlook is anchored by an expected increase in the GDP of commodity-exporting economies of around 17.5% due to strong growth in Guyana (47.5%), emanating from increased production of oil and gas, and a resurgence of energy production in Trinidad. and Tobago as supply-side constraints ease. Rising international crude oil prices are expected to translate into windfall revenues.
Services-exporting BMCs are expected to gain momentum, with an average growth of 4.8%, reflecting the continued influx of international visitors. This rebound is expected to strengthen in 2022 as restrictions ease, due to stronger health protection measures. However, the return of international passenger arrivals will depend on the acceleration of vaccination rates; effective management of the pandemic without resorting to full and prolonged lockdowns; and continued confidence in established protocols for safe travel in the region.
“A key lesson from the impact of the pandemic is that countries entering the pandemic on a strong macro-fiscal foundation have weathered headwinds better. challenges Many countries are implementing programs to achieve sustainability with the support of the international financial institution community, including CDB Others are doing so outside of supported programs but have established explicit fiscal anchors to function as platforms for macroeconomic policy frameworks,” CDB Economics Director Ian Durant told the bank’s annual press conference held virtually today.
The growth forecast for 2022 is also supported by expectations of accelerated implementation of several large infrastructure projects in the region.
“While a challenging year for the region, 2021 saw the continuation of an incipient regional recovery that began in late 2020,” the CBD chief economics officer pointed out.
“The combination of the easing of border controls and internal lockdown measures and the continued implementation of fiscal stimulus programs in some LDCs have helped regional economies recover some of the lost ground in economic activity. .”
In 2021, services exporting economies grew by 3.2%, which was due to a rebound in two sectors, hotels and restaurants, and wholesale and retail trade, supported by an increase of almost 10% of tourist arrivals between January and September, compared to the previous year. same period in 2020. Belize recorded a growth of 10.9% while the economy of Saint Lucia grew by 6.8%. The economies of Grenada, Antigua and Barbuda grew by 4.8% and 4.7% respectively, while the Bahamas gained 3.1% and Barbados, 1.4%.
Among commodity exporters, the average growth rate of 2.7% was led by Guyana (19.9%), reflecting an increase in crude oil production, as well as growth in the non-oil segment . Conversely, Trinidad and Tobago’s GDP contracted by 2.9%, due to lower natural gas production with effects on downstream industries, as well as mandatory shutdowns in the service sector. Similarly, in Suriname, GDP fell by 3.5% as the ongoing fiscal, economic and health crisis continued to weigh heavily on economic growth.
After a sharp increase in the regional debt-to-GDP ratio in 2020 of 17.7 percentage points, mainly due to the unprecedented contraction in regional GDP and, to a lesser extent, increased borrowing to respond to the COVID-19, the average debt-to-GDP ratio fell by 2.0 percentage points to 80.5% in 2021.
Durant explained that the impact of the pandemic has exposed the structural weaknesses that have caused the region’s acute vulnerability to global economic shocks. Therefore, while the pandemic has had an impact on a global scale, there is no doubt that the high level of export concentration, which is the direct result of the region’s structural weaknesses, has amplified the impact of the pandemic in the Caribbean.
Emphasizing that stimulus efforts must be consistent with the longer-term repositioning of economies in the region, the CDB’s chief economics officer said this was necessary to reduce these vulnerabilities. Therefore, the region must become more resilient in all its development dimensions – social, economic, environmental and institutional.
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