Regional Economic Outlook For 2014 Remains Optimistic
McKinsey’s latest survey on our global economic condition, indicated that the outlook for global and domestic growth remains quite optimistic. Business leaders are however, becoming increasingly concerned about the key domestic risks and geopolitical instabilities, especially in non-eurozone Europe, which may pose a threat to this growth over the period 2014-15.
Reports from the IMF, UN, OECD, and CDB all indicate that economic activity is expected to improve in 2014–15, largely on account of the recovery that is being observed across more advanced economies such as the United States and Asia. Global growth is now projected to be higher in 2014 at around 3.7 percent and increasing to 3.9 percent in 2015. In many emerging market and developing economies, stronger demand from the advanced economies will encourage further growth, whilst domestic weaknesses will remain a going concern.
After a decade of relatively strong economic performance, the Caribbean is now faced with increased challenges associated with declining trade, a moderation in commodity prices, and increasing uncertainty over our external financial vulnerabilities, due to the interconnected nature of global economies. Regional growth is now projected to increase to 3 percent this year, up from 2.6 percent in 2013.
For territories heavily dependent on tourism, recovery will be further linked to an increase in economic activity and traffic coming from the United States, along with remittances and investment flows. Growth in the tourism sector is set to remain low in 2014, at an estimated 1½ percent and commodity exporters would enjoy stronger growth at an estimated 3.7 percent.
Public sector debt is estimated to continue climbing, whilst current account deficits will decrease marginally, keeping the region largely dependent on funding from external sources. As growth estimates remain generally positive for the region, many economists and analysts agree that the rebuilding of fiscal buffers, strengthening of medium-term economic policy frameworks, use of monetary policy and flexible exchange rates to absorb some of the external pressures will all remain key challenges for our governments going forward.
Secretary General Angel Gurría noted in the OECD's latest economic outlook that “we can still achieve sustainable and inclusive growth, but the window is narrowing," In meeting the new challenges and opportunities posed by an increasingly interconnected global economy, the region would need to focus on boosting its competitiveness and growth potential through technological innovation, economic diversification, improved logistics performance and the development of higher value-added activities.