On Tuesday this week the World Bank released its mid-year Global Economic Prospects report, which included updated GDP growth projections for Latin America and the Caribbean. While there was positive news for Guyana, with 4.4% growth projected, the news was not good for Saint Lucia. Now burdened with a fiscal deficit of EC$70+ million and 24% unemployment, the island can expect no more 0.9% economic growth, according to the World Bank.
During an address to the nation Tuesday evening—the same day the World Bank figures were released—prime minister Kenny Anthony explained that the overall deficit, which currently stands at 5.7%, needs to be in the region of 3% and lower.
“Our Debt-to-GDP ratio of 73.6% should be no higher than 60%,” he said. “Most of the studies indicate that whenever the debt-to-GDP ratio is higher than 55%, it hurts the growth prospects of the country.”
According to the World Bank report, regionally growth remained “broadly flat” in Latin America and the Caribbean, reflecting “stable or declining commodity prices, the continued slowdown in China, the drop in first quarter US GDP growth and domestic challenges.”
The report revealed that some countries in the region did manage to post solid growth, among them Guyana, the Dominican Republic at 4 per cent and Haiti at 3.6 per cent.
No data was presented for Antigua, the Bahamas, Barbados or Grenada.
According to the World Bank, the Latin America and the Caribbean region stand to generate a modest 1.9 per cent increase in regional GDP in 2014, with growth accelerating to 2.9 per cent in 2015 and 3.5 percent in 2016.
Compare this to growth in the developing countries of the Middle East and North Africa region, which is expected to pick up gradually to 1.9 percent in 2014 (0.1 percent in 2013) and 3.6 percent in 2015 and 3.5 percent in 2016.
Developing countries are headed for a year of “disappointing growth” as first quarter weakness in 2014 has delayed an expected pick-up in economic activity, the report says. It goes on to note that bad weather in the United States, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of sub five per cent growth for the developing countries as a whole.
“Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 per cent,” said World Bank Group president Jim Yong Kim in a statement. “Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation.”