Trouble In Paradise

Caribbean 2009-10: Trouble In Paradise

In 2009/10 reinforced the worst

Given the small, open nature of the regional economy, we believe that the Caribbean suffer a prolonged recession - much worse than a sharp decline during the crisis post-September 11 tourism. We expect real growth in regional GDP of -2.5% and -0.3% this year and next, but warn that risks remain paramount should demand destruction world hurt key industries of the Caribbean - in particular, financial services, real estate and tourism - more than expected. The economy cools and the unemployment rate starts to grind more, there is a risk of growing public discontent, which could lead to increased protests, causing an already fragile security environment and erode the popularity Governments across the board. In this special report, we assess that countries are more likely to suffer due to acute external headwinds, which are best placed to recover once the dust settles world. (Http: / / www.bharatbook.com/detail.asp?id=129431&rt=Caribbean-2009-10-Trouble-In-Paradise.html)

With none of the major countries of the Caribbean face a general election this year, we expect a measure of political stability in 2009. However, local authorities will have their work cut out to curb the problem of crime more violent that ravaged the region in recent years. According to preliminary figures, Jamaica and Trinidad and Tobago have both sustained their deadliest year on record in 2008, recording 1,600 homicides (62 per 100,000) and 549 (42 per 100,000) respectively. Although both governments have established a framework for dynamic security policy in the future, we believe that the problem of crime remains a major problem for policymakers in the future.

The economic outlook is bleak in the Caribbean, with many of the region to look into the barrel to the recession. Few countries, if any, will remain free, with only Trinidad and Tobago for our "big six" (including Puerto Rico, Guyana, Barbados, Dominican Republic and Jamaica) should see positive growth in 2009. The main risk is a recession deeper and longer in the United States and the United Kingdom - two developed country markets that are vital to the influx of tourism, remittances and financial services revenues in the region .

The government bailout of Trinidad and Tobago financial giant CL Financial Group Stanford Group and the scandal has sent shock waves throughout the financial system of the Caribbean. Given the company's exposure to a wide range of industries in the regional economy, the resilience of the banking sector in the Caribbean could come under pressure in 2009. Add to the mix of low likelihood of financial offshore platforms (such as the Cayman Islands) because of the precarious situation of developed world of hedge funds and the disapproval of Washington regulatory frameworks, and we caution that the outlook Funding for the Caribbean appears dark.

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