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IMF guardedly optimistic over regional growth next year
Wednesday, December 12, 2007
In the face of a slowdown in global economic growth, the International Monetary Fund (IMF) has taken a 'guarded' view on the economic outlook for the Caribbean, although they maintain that it is 'broadly favourable'.
Sanjaya Panth, the multilateral-lending agency representative for the region, said, however, that although growth, which exceeded five per cent for the region last year, was expected to moderately slow down in 2008, downside risks have increased more recently.
Speaking last Thursday at a briefing held at the Bank of Jamaica in downtown Kingston, he argued that the Caribbean needs to increase economies of scale and risk sharing through regional integration.
By Panth's estimation, increased financial integration would help lower financial market spreads, although at the risk that associated open capital market accounts transmit shocks.
He also argued that there is a need to further develop the region's financial sectors which he said contributes to a large percentage of gross domestic product (GDP) but which is largely undeveloped due to the dominance of government securities in institutions' investment portfolios, illiquid secondary markets and low stock market turnover (despite high market capitalisation).
IMF deputy director for the Western Hemisphere, Markus Rodlauer, added that most countries in the region, such as Jamaica, have satisfied their external funding needs to the end of this year and for the first few months of next year.
But he cautioned that should the situation persist long into next year, some countries with large gross funding needs may find borrowing conditions more difficult than seen in recent times.
On the issue of debt, Rodlauer maintains the view that Jamaica requires faster growth, increased primary surpluses and strong debt management. Arguing that a successful tax reform was also critical if fiscal policy was to be improved, Rodlauer noted that the evidence from other country's suggest the needs to deeply root any reform in a broad national consensus on tax and expenditure.
Wednesday, December 12, 2007
In the face of a slowdown in global economic growth, the International Monetary Fund (IMF) has taken a 'guarded' view on the economic outlook for the Caribbean, although they maintain that it is 'broadly favourable'.
Sanjaya Panth, the multilateral-lending agency representative for the region, said, however, that although growth, which exceeded five per cent for the region last year, was expected to moderately slow down in 2008, downside risks have increased more recently.
Speaking last Thursday at a briefing held at the Bank of Jamaica in downtown Kingston, he argued that the Caribbean needs to increase economies of scale and risk sharing through regional integration.
By Panth's estimation, increased financial integration would help lower financial market spreads, although at the risk that associated open capital market accounts transmit shocks.
He also argued that there is a need to further develop the region's financial sectors which he said contributes to a large percentage of gross domestic product (GDP) but which is largely undeveloped due to the dominance of government securities in institutions' investment portfolios, illiquid secondary markets and low stock market turnover (despite high market capitalisation).
IMF deputy director for the Western Hemisphere, Markus Rodlauer, added that most countries in the region, such as Jamaica, have satisfied their external funding needs to the end of this year and for the first few months of next year.
But he cautioned that should the situation persist long into next year, some countries with large gross funding needs may find borrowing conditions more difficult than seen in recent times.
On the issue of debt, Rodlauer maintains the view that Jamaica requires faster growth, increased primary surpluses and strong debt management. Arguing that a successful tax reform was also critical if fiscal policy was to be improved, Rodlauer noted that the evidence from other country's suggest the needs to deeply root any reform in a broad national consensus on tax and expenditure.
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