Weaker economic times ahead

“We must increase our levels of resilience and our flexibility to adapt to changing circumstances.”

That was the advice given by Sir K. Dwight Venner, Governor of the Eastern Caribbean Central Bank (ECCB), as he delivered the Eastern Caribbean Currency Union (ECCU) economic review for 2008 on January 29.{{more}}

Sir Dwight, whose address was streamed via a video link-up to the other seven members of the ECCU from the headquarters in St Kitts and Nevis, said that the international economy is at an “historic turning point.”

Reflecting on the current crisis, Sir Dwight said that “globalization and the increased interdependence of the global economy have dictated that no country will escape the effects of this crisis.”

“The bottom line of our reality is that we have small, open and vulnerable economies which are largely dependent on what happens in the rest of the world.”

He reiterated what government officials throughout the region have been warning, that is, tourism, foreign direct investments and remittances will go down.

“Tourist arrivals and expenditure have fallen, and the bookings going forward are not promising…if the recovery in the international economy does not come in 2009, we would then face two weak back-to-back tourist seasons,” he said.

Sir Dwight spoke of the action being taken following recent consultations with Ministers of Tourism, Finance, and representatives of the banking sector in the OECS.

These consultations culminated in a meeting of the Heads of Government of the OECS and the Ministers of Finance who make up the Monetary Council.

Among the short term responses is an attempt to maintain the level of ongoing economic activity by engaging in targeted public sector investment programmes, supporting the tourism sector, including cost reduction measures and developing marketing strategies, while the governments also provide “efficient and effective social safety net programmes to address the needs of the poor.”

The assurance about the safety of the banks that operate with the OECS was also given. He said that Canadian banks, which are the largest banks in the Currency Union, “are well regulated in their home jurisdiction and have been rated number one in the world.”

“The public can be assured that everything that is humanly possible is being done to preserve the safety and soundness of our financial institutions,” Sir Dwight said.

Sir Dwight said that they were “well advanced” in creating an Eastern Caribbean Enterprise Fund (ECEF), which is part of the ECCB’s commitment to strengthen the development of the private sector in the territory.

“The private sector contributes to over 70% to the GDP of the eight ECCU countries. The ECEF will source funding for business skills training and technical assistance. It will also offer growth financing to augment and supplement the services currently provided by various financial institutions,” the ECCB’s website ( http://www.eccb-centralbank.org/Money/ecef.asp) states.

Additionally, Prime Minister Dr Ralph Gonsalves leads a transition team to “address the current crisis and to align the responses with the achievement of the goal of Economic Union,” Sir Dwight said.

As he addressed the need for the OECS to cooperate in the development of tourism, the financial sector and other sectors, Sir Dwight said that in the region we make the mistake to think that we are in competition with each other.

He stressed that when the chips are down it will take collaboration to ensure survival.