Preparing for another challenging year ahead

18.DEC.09

Editor: 2009 has so far been a challenging year, especially as we grapple with the impact of the global financial crisis.

For some of us, this year brought home the harsh reality that in SVG, the rate of financial illiteracy is very high. For example, some lost up to 90 per cent of their investments in British American, going after the highest interest rate, without seeing the higher exposure to risk.{{more}}

Also, we lack the level of political maturity which is necessary for us to build a modern economy. This was demonstrated recently with the quality of discussion on critical matters such as Constitutional Reform. We were not able to seriously rise above the political divide and personalities. We are now in the festive season and most of us will either indulge ourselves in plenty eating (pork for me) and drinking. Some will indulge in compulsive spending and also plenty politicking because of the recent results of the Referendum. So while we go about life as usual, I seek your attention for just a moment as we reflect on what the outlook for 2010 might be as we prepare to usher in a new year.

Our economic makeup and our location as a country leave us vulnerable and exposed to the threats of hurricanes and other natural disasters, and the vagaries of the international communities. The economies of the OECS are largely dependent on tourism and remittances, and are vital for any recovery from the effects of the global downturn. The International Finance Corporation (IFC), World Bank Group, reveals that tourism contributes 15% directly to the GDP of the OECS member countries, 50% indirectly, and employs about 40% of the OECS labour market. Data from the ECCB also indicates that tourism contributes approximately 70% of the ECCU’s foreign exchange earnings. A recent update by the IMF “World Economic and Financial Surveys” suggests the regional economic outlook of economies will be slow in recovering because our growth depends significantly on lagging employment and consumption in the USA, which is significant to improve tourism and remittances which we heavily depend on. The IMF also says our recovery will be slower because there is not much room for policy stimulus because of the makeup of our economies.

In 2010 the threats and challenges to recovery could be further exacerbated by rising food prices and oil prices reaching the US$100 barrel mark again. World Bank President Robert B. Zoellick, at a panel discussion on the global food crisis at the Brooklyn Institute in Washington, indicated that in 2010 we could see another round of higher food prices due to current low levels of food stocks, rising cereal prices and the possibility that some rice producing countries having to import rice next year. This analysis was also supported by the United States Department of Agriculture (USDA) in their “Agricultural Baseline Projections for 2010, where they projected food prices to increase because of supply related issues and the volatility in oil prices. If these economic indicators are not enough to alarm you of the harsh realities confronting us as we move into a new year, just think of the fact that a significant amount of our families and towns are on the coastal line and are at the mercies of the sea. In a recent World Bank report on climate change in Latin American and the region, a scientist indicated that countries nearer to the equator where temperatures are already higher and also the melting of the Ice Caps are at greater risk of rising sea levels.

As we prepare to usher in a new year, it is imperative that we lift the level of public discussion to help educate our people about the threats and challenges ahead. From current analysis, the tourism sector in 2010 will experience another difficult year, and food and oil/ gas prices are projected to go up. We may not see much improvement in remittances, and while I believe our Prime Minister will fashion a Budget to help cushion the impact, it might not be enough, hence our own actions from an informed position could prove critical in these challenging times. Go easy on the spending, cool the material impulsion to avoid going deeper in debt and try saving a little thing. Let me take this opportunity to wish you and your newspaper and the whole of SVG a Merry Christmas and God’s blessings in the New Year.

Cerlian “Maff” Russell