St. Kitts and Nevis (WINN); Latin America and the Caribbean is expected to gradually emerge from recession in 2017, but to secure strong and inclusive growth going forward the region needs to address gaps in infrastructure, improve education outcomes, strengthen the business environment, and tackle corruption, the IMF said in its latest Regional Economic Outlook for the Western Hemisphere.
Economic growth in Latin America and the Caribbean in 2016 was the third-lowest in 30 years—contracting by 1 percent after stagnating in 2015, however the IMF forecasts growth to expand by 1.1 percent this year and 2 percent in 2018. Over the medium term, growth is expected to remain subdued at 2.6 percent.
Alejandro Werner, Director of the IMF’s Western Hemisphere Department, said prospects for the Caribbean region are improving, with growth in the tourism-dependent economies expected to be better than those reliant on commodity exports. Global policy uncertainty, the potential tightening of global financial conditions are some of the main risks facing the regions’ growth prospects.
“When you look at the Caribbean, we have the Caribbean doing better than in the last few years. Basically the tourism-led Caribbean economies are growing much faster than before on the back of a significant windfall from the decline in the price of energy and the positive effects coming from the demand for tourism in advanced economies; and obviously the two or three Caribbean economies that are dependent on commodities are struggling.
“The main risks to the Latin America and Caribbean economies are tilted to the downside. One of them is an escalation of global policy uncertainty and rising tide of economic nationalism that might affect the most open economies in Latin America, as a matter of fact all of them, through potential downside risks to the world economy; obviously a potential tightening of global financial conditions on the back of normalization of monetary policy in the US, that heeding capital inflows to the region if it were to materialize; and obviously a hard landing in China and renewed decline in commodity prices- those are the main risks that we highlighted in the report.”
Coming off a 4.9% estimated economic growth in 2015, St. Kitts and Nevis experienced growth of 3.2% in 2016, for a fifth consecutive year of economic growth.
The IMF is projecting improved economic growth for the federation of 3.5% in 2017 and 3.4% in 2018. This exceeds the average growth rate in the ECCU region.
St. Kitts and Nevis also managed to further reduce its public debt, projected to reach the 60% ECCU debt-to-GDP target by 2018, ahead of the other ECCU member countries.