EDITORIAL

LISTENING to the range of projections on economic performances globally and the assessments of the impact such performances have had on small states, continue to be worrying. Against this background it seems that economic growth rates of between 1.5 per cent and possibly 2.5 per cent could very well be the new normal when it comes to economic output, and certainly in this region. 

 

One is left to wonder whether growth of four per cent, five per cent and even higher will be long in coming? Last week the World Bank’s semi-annual report on Latin America and the Caribbean revealed that while the region is showing signs of economic recovery, there will be an economic contraction of 1.1 per cent this year and a recovery of 1.8 per cent next year. The Bank attributed the recovery to an economic pick-up in South America where growth will reach 1.5 per cent next year. The other countries should do better growing by 2.4 per cent in 2017. Since the onset of the recession, recovery has been slow whenever it does happen, and the momentum is certainly not there on a consistent basis. These countries depend a lot on what happens in the USA and Europe which are growing if not spectacularly, and on China which has slowed considerably in recent times. Add to this the protectionist policies which have taken root and there is little doubt that low growth will continue.

 

It is also important to note that the commodity economies around the world, including many right here in the Caribbean are having the time of their lives. Commodities led by petroleum continue to fetch some extremely low prices and those countries like many in the Middle East and Europe are looking for remedies to bring their economies out of the doldrums. Currently, oil prices are hovering around US$53 a barrel and could be higher depending on what the Organisation for Petroleum Exporting Countries (OPEC) intends to do with output. The lower prices have created economic headaches for oil producers like Saudi Arabia, Russia, Venezuela and our own Trinidad and Tobago, to name a few and to show how widespread the impact has been. Any increase in price like the one just quoted would give producers more elbow room which their economies require in order to stabilise.

 

OPEC’s aim is to cut output by at least 700 000 barrels a day.

 

The World Bank is suggesting that countries in Latin America and the Caribbean have to face the reality that with lower commodity prices, the region can no longer depend on domestic demand to boost growth, as it did during the bonanza years.

 

The low growth which seems to be happening all over is definitely not enough to lift people out of poverty, maintain sustained economic output and for those countries that are heavily in debt provide enough resources to earn foreign exchange to help them tackle their high debt.

 

What are the answers? No one seems to know. Countries have been resorting to protectionist trade policies that are likely to slow the growth of international trade and subsequently economic growth. There have to be answers to this situation.