We have been put on notice. The increases we have been experiencing in the cost of living are likely to continue for more than a year, so it may be in our best interest to watch our spending this Christmas.
This point was made last Wednesday evening during ‘The Press Room’, a Live discussion programme hosted by SEARCHLIGHT on Facebook and YouTube. The panel included Professor Justin Robinson of the University of the West Indies who noted that prices have not increased at this rate since the 1990s. He projected that at best, improvement could be six to eight months away, but it may be as long as 15 months before we experience some relief. (See story on page 7)
The economy of St Vincent and the Grenadines has shrunk over the last two years as a result of the COVID-19 pandemic and the volcanic eruptions, and at the same time, we have taken on more debt, which means that the ratio of debt to the Gross Domestic Product (GDP) has increased. The IMF recently said we, like some other small developing states are at high risk for debt distress; debt forgiveness was therefore recommended in order to buttress financial stability.
The fortunes of rich and poor countries are diverging. While the advanced economies are on track to regain their pre-COVID-19 growth trajectories; the developing economies, by and large, are still languishing. In 2020, the recession in the developed world was led by services as lockdowns and social distancing made it impossible for that type of business to thrive. Recovery in the developed world by contrast, has largely been led by demand for goods, which has resulted in supply chain problems and higher than average inflation, which have hit countries like SVG, where almost everything is imported, much harder. Recovery has also been much slower.
We note that the Government has announced a $10 million payout this Christmas, most likely in an effort to stimulate the economy (see story on page 7). They recognize that there is no simple route to recovery for St Vincent and the Grenadines, so a multi-pronged approach will be needed. The Ministry of Tourism has said that beginning this week, they have relaxed protocols for cruise tourists to allow them to be able to move around the country with few restrictions, which means that the tourist dollar should reach more people (see story on the back page).
On the household and individual levels, we ought to be wise and disciplined in relation to our spending and behaviour. The last thing we need is another upsurge in COVID-19 that would set us even further back.