1. Macroeconomics and Trade in Caribbean SIDS: Setting the Context 1.Structural characteristics 2.Regional performance 3.Policy challenges Dr. Justin Ram Director Economics Department

2. Mainly upper-middle to high- income economies Notes:1/ GNI per capita (2011) calculated using the World Bank Atlas method, b 2/ Countries classified as high-income, upper middle income, lower middle income and low-income, based on threshold levels established by World Bank CountryPer capita Income (1)Classification (2) Cayman Islands52,185 High Income British Virgin Islands35,565 Turks and Caicos Islands26,658 Bahamas, The21,889 Anguilla18,403 Trinidad and Tobago16,455 Barbados14,439 St. Kitts and Nevis12,842 Antigua and Barbuda12,080 Upper Middle Income Montserrat9,797 Grenada7,403 Dominica6,963 St. Lucia6,883 St. Vincent and the Grenadines6,100 Jamaica5,132 Belize4,310 Guyana2,971Lower Middle Income Haiti666Low Income SOURCE: United Nations Statistics Division National Accounts Database

3. But very small and open… SOURCE: United Nations Statistics Division National Accounts Database. Total population: –Caribbean = 16,658,142 –Chile = 17,269,525 Total GDP: –Caribbean = $70.1 million –Oman = $72.7 million SOURCE: World Bank World Development Indicators, CDB calculations

4. … reflected in output and export concentration… SOURCE: United Nations Statistics Division National Accounts Database, CDB calculations

5. … high costs and low productivity SOURCE: Central Banks and National Statistics Offices, CDB calculations

6. … high unemployment and migration… SOURCE: Central Banks and National Statistics Offices, CDB calculations

7. …linked to high dependence on remittances SOURCES: World Bank Remittances Data and United Nations Statistics Division National Accounts Database

8. Also, high incidence and impact of natural disasters SOURCE: EM-DAT Disaster Database, www.em-dat.be, Université Catholique de Louvain, Brussels, Belgium High incidence due to tropical climate Impact related, inter alia, to size, openness and insularity

9. And 2013 hurricane season predicted to be very active SOURCES: 1) Klotzbach and Gray, Colorado State University, http://hurricane.atmos.colostate.edu/Forecasts (2) Saunders and Lea, University College London, http://www.tropicalstormrisk.com

10. All of this contributes to fiscal imbalances financed by debt Fiscal snapshot 2012 SOURCE: International Monetary Fund World Economic Outlook, April 2013

11. With limited access to concessional financing sources, region highly indebted SOURCE: International Monetary Fund World Economic Outlook, April 2013

12. As reflected in recent credit rating actions Standard and Poor’s Credit Profiles SOURCE: Standard and Poor’s, Moody’s Investor Services, Fitch Ratings and CariCRIS. Rating Agency Standard & Poor'sMoody'sOther CountryRating (R) Outlook (O) ActionDateRating (R)Outlook (O) ActionDateRating (R) ActionDate ANG CariA-Re- Affirmed 8-Oct-12 BAHBBBNegative OO24-Sep-12Baa1Negative RR14-Dec-12 BARBB+Stable  R  O17-Jul-12Ba1Negative RR20-Dec-12CariA+ RR22-Mar-13 BZEB-StableAssigned post- default 20-Mar-13B3Stable RR13-Feb-07 CAY Aa3StableAffirmed12-Feb-13 DOM CariBBB-Re- Affirmed 5-Jun-13 GRESD/DNM  R - Default12-Mar-13 JAMCCC+StableAssigned post- default 6-Mar-13Caa3Stable RR6-Mar-13Fitch CCC RR3/1/2013 MONBBB-Stable OO2-Sep-11 SLU CariBBB RR14-Jun-13 SVG B2Stable RR9-Oct-12 TTAStableConfirmed4-Aug-11Baa1StableAffirmed16-Jan-13CariAAARe- Affirmed 14-Jun-13 TCI Fitch AA+ RR22-Apr-13

13. Tourism performances mixed…

14. Accounting for the Green economy - Adjusted Net Savings

15. High debt burden and high Poverty rates and inequality

16. And key policy challenges remain Challenges: Countries remain highly vulnerable to external economic shocks and the perennial downside risks posed by natural disasters, compounded by climate change impacts Policy imperatives: Economic diversification, environmental management, DRM and climate change adaptation Financing issues: Implementing these policies will require finding alternative means of financing given high debt and limited access to concessional funds

17. Summary & Conclusions Macro Review: –Weak & volatile growth Losing ground over time to key comparators –External imbalances Current A/C deficits related to high dependence on imported goods and income outflows –Internal imbalances Large deficits High debt levels –Inflation and exchange rate pressures Outlook: –Positive but hinges on global recovery and subject to key risks Policy issues –Economic diversification –Financing given indebtedness and limited access to concessional funds –Environmental management, DRM and Climate change adaptation