Eastern Caribbean economies expect economic decline

Governor of the Eastern Caribbean Central Bank (ECCB) Sir Dwight Venner reported that the bank was able to net a profit of $36.8 million. However, he said real Gross Domestic Product (GDP) in the Currency Union is projected to decline this year and next y

ST JOHN’S, Antigua, July 2, 2009 – The Eastern Caribbean Central Bank (ECCB) was able to make a profit last year despite the difficulties on the international market, but the economic situation for countries of the Eastern Caribbean Currency Union (ECCU) is expected to decline in coming months.

ECCB Governor Sir Dwight Venner has reported that the bank was able to net a profit of $36.8 million. However, he said real Gross Domestic Product (GDP) in the Currency Union is projected to decline this year and next year.

“The projected decline in tourism and construction is over 14 per cent in 2009 and a little less in 2010. Governments' current revenue is projected to fall by approximately 12.9 per cent in 2009,” Sir Dwight said in his 2008/2009 report on the ECCU on Tuesday.

“One can summarise by simply stating the fact: these are difficult and challenging times.”

Noting that the global crisis has resulted in credit literally drying up in some developed countries and a rise in unemployment, among other things, Sir Dwight said the developments in the international economy have eroded conditions in the ECCU.

He said inflows of travel receipts and foreign direct investment (FDI) have contracted.

“Travel receipts fell by 2.5 per cent in 2008, in contrast to a 3.0 per cent increase in 2007. Foreign direct investment decreased by 29.1 per cent, consistent with the slow-down in direct investment-related construction activity in some member countries. By contrast an increase of 14.6 per cent was recorded in FDI inflows for 2007. These inflows have accounted for, on average 27.5 per cent and 22.5 per cent of GDP respectively from 2005 through 2008,” Sir Dwight said.

“This had a negative impact on central governments' finances and debt.”

But the ECCB Governor has also suggested that the situation could present the opportunity for restructuring and transforming Eastern Caribbean economies which are experiencing continuous decreases in output and productivity.

“One can only believe that, in these times of great uncertainty, the challenges faced will bring out the best in our people. We need stability, fortitude, unity and a strong sense of purpose to see us through these difficulties,” he said.