Economic Survey of the Caribbean 2015: Balancing economic recovery and high debt in the Caribbean

The survey provides an overview of the economic performance for 2014 of the Bahamas, Barbados, Belize, Guyana, Jamaica, Suriname, Trinidad and Tobago plus the eight member states of the Eastern Caribbean Currency Union (ECCU) and the outlook for 2015. Data were collected from a review of reports from national governments and through interviews with government officials in each of the countries analyzed.

The employment situation in Latin America and the Caribbean: Countercyclical policies for a sustained recovery in employment

Latin America and the Caribbean experienced an unexpectedly vigorous economic recovery in 2010 after the output contraction of 2009. This upturn was reflected in the region’s employment and unemployment rates, which resumed the positive trends that had been broken by the crisis, and formal wages rose slightly. The strength of the recovery and labour-market performance varied markedly across subregions and countries, however. The first part of this joint ECLAC/ILO publication on the employment situation in Latin America and the Caribbean looks at how labour markets have responded to the rapid economic upswing in 2010 and early 2011, highlighting both the significant advances achieved in the post-crisis period and the sharp differences evident across subregions and countries. As well as tapping into the improved external conditions which followed upon the Asianled global economic upturn, several Latin American countries were also able to contain the impacts of the crisis and underpin their own recovery with countercyclical policies, thanks to the leeway gained by their macroeconomic management during the run of growth from 2003 to 2008. These countries were in a position to implement expansionary fiscal and monetary policies, some of which channelled higher fiscal spending through labour-market policies or softened the impact of the crisis on employment and income, as discussed in previous ECLAC/ILO bulletins. Since the region is fairly new to the use of countercyclical policies, the second part of this document reviews the experiences arising from those policies and considers lessons for institutionalizing them. Economic growth in the Latin American and Caribbean region has historically been marked by the volatility of its economic cycles, with high-growth periods being succeeded by deep crises. Volatility has conspired against the use of production resources over extended periods and short growth horizons have impeded investment in capital and labour. In the recent international crisis, the deployment of countercyclical macroeconomic policy helped to reduce the depth and duration of the impact and to leverage a more rapid recovery. It is therefore worth looking at the fundamentals of a long-term countercyclical macroeconomic policy which would provide the tools needed to deal with future crises and pave the way for economic growth that may be sustained over time. A special factor during this crisis was that a greater effort was made to support employment and income. Several of the labour-market policy measures taken acted as vehicles for conveying increased fiscal spending to individuals, reflecting greater consideration for equality concerns. Indeed, these measures were aimed not only at stabilizing andstrengthening domestic demand per se, but also at preventing the crisis from hitting lowest-income households the hardest, as had occurred in previous episodes. And —again unlike the pattern seen in previous episodes— inflation actually fell during the crisis as the high food and fuel prices seen in the run-up to it eased as a result of both existing macroeconomic policies and global conditions. This averted the surge in inequality so often seen in previous crises. Two caveats must be added, however. First, not all the countries were in a position to deploy strong countercyclical policies. Many simply lacked the fiscal space to do so. Second, some countries took this sort of measure more as an ad hoc response to the crisis than as part of a clearly established countercyclical policy strategy. The challenge, then, is to institutionalize a countercyclical approach throughout the economic cycle. Taking up this challenge is part of making economic growth more sustainable. This year —2011— was ushered in by rapid economic growth and substantial improvements in labour indicators. With the region’s GDP projected to grow well over 4% this year, ECLAC and ILO estimate that the regional unemployment rate will fall substantially again, from 7.3% in 2010 to between 6.7% and 7.0% in 2011.

Latin American South-South integration and cooperation: from a regional public goods perspective

Includes bibliography

Income distribution and poverty through crisis and adjustment

Includes bibliography

The Netherlands Antilles: trade and integration with CARICOM

Introduction The Netherlands Antilles is an autonomous entity within the Kingdom of the Netherlands and comprises a federation of five Caribbean islands: Bonaire and Curacao (the Leeward islands) which comprise 80 per cent of the population of 211,000 and Saba, St. Eustatius and the southern part of St. Maarten (the Windward islands). Like the other countries in the Kingdom, it enjoys full autonomy in internal matters as, for example, education, public health, justice and customs. It has a per capita income of about US$ 12,000. The Leeward Islands and the Windward Islands account for about 75 per cent (Curacao (70 per cent) and Bonaire (5 per cent)) and 25 percent respectively of the economy of the Netherlands Antilles. The Netherlands Antilles has its own currency, the Netherlands guilder, which is pegged to the United States dollar at a fixed rate since 1971. The economy has some unique features that stem from its close relations with the Netherlands, its undiversified nature and heavy dependence on tourism, offshore finance, oil refining and shipping, the high share of trade (exports of goods and services of about 75 per cent of GDP), its geographical characteristics, its common border with the French Republic on St. Maarten, its duty-free access for imports from Aruba, its de facto free trade zone (FTZ), partial dollarization, especially for the Windward Islands, and its highly regulated labor market (1). Adverse economic shocks in the last two decades affected particularly the offshore financial sector and the oil refinery and, to a lesser extent, tourism. The repeal of withholding taxes in the United States in the 1980s indirectly caused the collapse of a number of highly profitable offshore financial activities in Curacao, leading to significant drops in government revenue and contributions to foreign exchange earnings. The withdrawal of Shell from Curacao in 1986 and the (temporary) closure of the oil refinery which had been a mainstay of the Curacao economy for almost three quarters of a century was the second major shock. It was subsequently leased to the Venezuelan State Company, Petroleos de Venezuela Sociedad Anonima (PDVSA), which resumed operations and preserved employment. In the 1990s, the Windward Islands were bit by several devastating hurricanes, which destroyed much of the economic infrastructure on the islands, including about half of the number of available hotel rooms in St Maarten. Further negative shocks were related to the discontinuation of certain trade privileges on European markets for Overseas Countries and Territories (OCTs), the withdrawal by the Netherlands of certain tax privileges for Dutch pensioners residing in the Netherlands Antilles and disruptions in the availability of Solidarity Fund resources for the smaller islands. National income has been on the decline since 1997. GDP declined by about 6 per cent between 1997 and 1999. Underlying fiscal imbalances and structural weaknesses have also impacted negatively on the economy. In recent years, with recession high unemployment and migration have been experienced (2). The Netherlands Antilles has been able to survive thanks to additional aid from the Netherlands, large-scale spontaneous emigration (mostly to the Netherlands), some drop in international reserves, an increase in domestic debt and arrears and reduced outlays for the maintenance of public assets. From 1986 onwards, successive efforts at restoring macroeconomic balance, particularly with regard to public finance, were made, but were unsuccessful. Adjustment was also attempted in 1996 and 1997, but failed to meet the desired targets. In 1999, the government launched a new National Recovery Plan" (NRP). The NRP contains important medium-term structural adjustment measures aimed at restoring macroeconomic balance and conditions for revitalizing the economy. The NRP subsequently served as an important input into a comprehensive adjustment plan drawn up with the assistance of the International Monetary Fund (IMF) and reflected in the government's Memorandum of Economic Policies dated 15 September 2000. Beyond restoring macroeconomic balance and reforming the economic incentive framework, the government aims at establishing a Comprehensive Development Framework (CDF) for the formulation and implementation of a sustainable long-term growth strategy. It is against the above background that this study is undertaken. Its main objective is to assess the integration options facing the Netherlands Antilles (3) vis-a-vis the Caribbean Community (CARICOM). A secondary objective is to examine the above taking into account, inter alia, the level of trade between the Netherlands Antilles and CARICOM, the barriers to trade between the two groups of countries and the requirements for increasing trade between the two groups of countries. The Consultant was given an initial Draft Terms of Reference (Annex 1) with the intention of modifying it in the course of the interviews with all the stakeholders. The main idea that emerged from these interviews was a concern with some possible form of association with CARICOM. The Consultant was asked to exam the costs and benefits of various forms of association and to recommend an option. This adjustment of the Terms of Reference (TOR) was substantial and involved the Consultant having to do some interviews and collect documentation in CARICOM. The study essentially revolves around the search for a road map for the Netherlands Antilles. It is tackled in the first instance by describing the existing system of trade of the Netherlands Antilles with a view to determining the import and export structures and the specific nature and extent of trade in goods and services between the Netherlands Antilles and CARICOM. 1 Netherlands Antilles: Elements of a Strategy for Economic Recovery and Sustainable Growth. Interim Report of the World Bank Mission, 5-20 December 2000. 2 IMF, IMF Country Report No. 01/73 Kingdom of the Netherlands-Netherlands Antilles-Recent Development, Selected Issues and Statistical Appendix. May 2001 3 The Netherlands Antilles is a country within the Kingdom of the Netherlands. It contains five islands. Curacao and Bonaire (Leewards) and St Eustatius, Saba and St Maarten (The Windwards)"

Access of Latin American and Caribbean exports to the US market 2004-2005

Includes bibliography

An assessment of the economic impact of climate change on the Agriculture, Health and Tourism sectors in Jamaica

This report analyses the agriculture, health and tourism sectors in Jamaica to assess the potential economic impacts of climate change on the sectors. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change on Jamaica. It also has the potential to provide essential input for identifying and preparing policies and strategies to help move the Region closer to solving problems associated with climate change and attaining individual and regional sustainable development goals. Some of the key anticipated manifestations of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050. An evaluation of various adaptation strategies was also undertaken for each sector using standard evaluation techniques. The outcomes from investigating the agriculture sector indicate that for the sugar-cane subsector the harvests under both the A2 and B2 scenarios decrease at first and then increase as the mid-century mark is approached. With respect to the yam subsector the results indicate that the yield of yam will increase from 17.4 to 23.1 tonnes per hectare (33%) under the A2 scenario, and 18.4 to 23.9 (30%) tonnes per hectare under the B2 scenario over the period 2011 to 2050. Similar to the forecasts for yam, the results for escallion suggest that yields will continue to increase to mid-century. Adaptation in the sugar cane sub-sector could involve replanting and irrigation that appear to generate net benefits at the three selected discount rates for the A2 scenario, but only at a discount rate of 1% for the B2 scenario. For yam and escallion, investment in irrigation will earn significant net benefits for both the A2 and B2 scenarios at the three selected rates of discount. It is recommended that if adaptation strategies are part of a package of strategies for improving efficiency and hence enhancing competitiveness, then the yields of each crop can be raised sufficiently to warrant investment in adaptation to climate change. The analysis of the health sector demonstrates the potential for climate change to add a substantial burden to the future health systems in Jamaica, something that that will only compound the country’s vulnerability to other anticipated impacts of climate change. The results clearly show that the incidence of dengue fever will increase if climate change continues unabated, with more cases projected for the A2 scenario than the B2. The models predicted a decrease in the incidence of gastroenteritis and leptospirosis with climate change, indicating that Jamaica will benefit from climate change with a reduction in the number of cases of gastroenteritis and leptospirosis. Due to the long time horizon anticipated for climate change, Jamaica should start implementing adaptation strategies focused on the health sector by promoting an enabling environment, strengthening communities, strengthening the monitoring, surveillance and response systems and integrating adaptation into development plans and actions. Small-island developing states like Jamaica must be proactive in implementing adaptation strategies, which will reduce the risk of climate change. On the global stage the country must continue to agitate for the implementation of the mitigation strategies for developed countries as outlined in the Kyoto protocol. The results regarding the tourism sector suggest that the sector is likely to incur losses due to climate change, the most significant of which is under the A2 scenario. Climatic features, such as temperature and precipitation, will affect the demand for tourism in Jamaica. By 2050 the industry is expected to lose US$ 132.2 million and 106.1 million under the A2 and B2 scenarios, respectively. In addition to changes in the climatic suitability for tourism, climate change is also likely to have important supply-side effects from extreme events and acidification of the ocean. The expected loss from extreme events is projected to be approximately US$ 5.48 billion (A2) and US$ 4.71 billion (B2). Even more devastating is the effect of ocean acidification on the tourism sector. The analysis shows that US$ 7.95 billion (A2) and US$ 7.04 billion is expected to be lost by mid-century. The benefit-cost analysis indicates that most of the adaptation strategies are expected to produce negative net benefits, and it is highly likely that the cost burden would have to be carried by the state. The options that generated positive ratios were: redesigning and retrofitting all relevant tourism facilities, restoring corals and educating the public and developing rescue and evacuation plans. Given the relative importance of tourism to the macroeconomy one possible option is to seek assistance from multilateral funding agencies. It is recommended that the government first undertake a detailed analysis of the vulnerability of each sector and, in particular tourism, to climate change. Further, more realistic socio-economic scenarios should be developed so as to inform future benefit-cost analysis.