Region must increase economic competitiveness – CDB Official

In an ever changing global economic landscape and with the added uncertainties brought on by the coronavirus pandemic, it is increasingly vital that the region continues to increase its economic competitiveness.

It is also important for countries to improve their investment climate.

“The COVID-19 pandemic has not only caused a global health emergency, but has slowed economic growth, negatively affecting trade, investment, and employment,” says Daniel Best, Director of Projects at the Caribbean Development Bank (CDB).

Best made the comments while speaking virtually last week Thursday during the launch of a CDB funded project aimed at institutional strengthening and capacity building of Invest SVG employees.

He said the fallout from the coronavirus pandemic is expected to have a severe negative impact on the achievement of the United Nation’s (UN) Sustainable Development Goals (SDG).

Best said the International Monetary Fund (IMF) had estimated a contraction in the global economy of three and a half per cent in 2020 while the World Trade Organization (WTO) estimated that world trade would have plummeted by 9.2 per cent in 2020 due to the pandemic.

“Even more pertinent to our own small vulnerable economies is the disruption in the tourism industry that has stunted economic activity in the Caribbean,” Best noted.

He said that with the heavy reliance of several of the Bank’s borrowing member countries on tourism, Gross Domestic Product (GDP) in the region was projected to contract by 7.9 per cent in 2020, exacerbating income inequality and poverty throughout the region.

Best stressed that the Micro, Small and Medium Enterprises (MSMEs) sector has also been negatively impacted.
“The shrinking of formal and informal income earning opportunities especially among women and low income groups has created a challenge for governments, households and individuals.

“This is especially troubling because of the pivotal role which MSMEs play in the Caribbean economies,” Best said.
He noted that the findings published in CARICOM’s 2016 regional MSME policy were reconfirmed in a CDB finance study that shows that on average, MSMEs contribute 50 per cent of GDP and create 45 per cent of the jobs in our region.

“We know that the situation in St Vincent and the Grenadines is very typical of the rest of the region in this respect,” Best said while adding that another troubling factor is that even before COVID-19, there were systemic challenges facing MSMEs and the wider business sector in the Caribbean which the pandemic has now worsened.

In his role at CDB, Best is accountable for the management, pipeline development, appraisal and implementation of the Bank’s lending and technical assistance programmes across multiple sectors, especially among women and low income groups.

He said the World Bank’s annual Doing Business Report has pointed to significant challenges across the Caribbean.

“Fourteen CARICOM territories were assessed and based on the 2020 overall ranking, 12 of the 14 have fallen in ranking relative to where they were five years earlier. That is in 2016,” Best pointed out while adding that the report also indicated that even though there had actually been a record number of reforms in the region, there is still a long way to go to remove obstacles to entrepreneurship and boost economic growth.

“Against this background, this project is timely, more so now than ever before as it aims to bring about an overall increase in FDI inflows and an improvement in the trade balance of SVG due to the increase competiveness of exporting firms in the country,” Best said in praise of the decision by Invest SVG to invest in their human resource.

He said the new strategic direction of Invest SVG will ensure enhanced capability to provide investment promotion and export development services in line with international good practices.