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Barbados, Guyana and Jamaica Country Risk Report Q4 2016

  • August 2016
  • -
  • Business Monitor International
  • -
  • 55 pages

Core Views

We believe that the English-speaking Caribbean will continue to see a modest economic recovery in the coming quarters as US growth continues. A strengthening US consumer will boost tourism to the region, driving growth in tourism-dependent economies. Financial services will continue to struggle due to tightening financial regulation in developed economies, while lower precious metals prices will weaken the macroeconomic outlook for the region's miners. That said, growth will remain stronger in the region's mining-driven economies than in its predominantly tourism-driven countries. Caribbean economies will continue to face economic headwinds in the coming years in light of rising debt burdens, fixed exchange rate regimes, and modest growth prospects. These factors, combined with our view that financial services sectors will see a significant
recovery in the next few years, mean that we do not rule out additional credit events or major balance of payments corrections in some of the small island economies.

Major Forecast Change
We now forecast Guyana's fiscal deficit to equal 5.2% of GDP in 2016, and downward revision from our previous 5.0% forecast, as the 2016 budget includes new capital expenditure.

Table Of Contents

Barbados, Guyana and Jamaica Country Risk Report Q4 2016
BMI Indices - Brief Methodology.. 5
Composite Score5
BMI Risk Index - Barbados6
BMI Risk Index - Guyana7
BMI Risk Index - Jamaica...8
BMI Index League Tables...9
Regional SWOTS. 10
Regional Executive Summary 13
Core Views 13
Major Forecast Changes ..13
Key Risk 13
Chapter 1.1: Economic Outlook - Barbados 15
Economic Growth Outlook.. 15
Economic Growth To Remain Tepid Through 2016...15
Economic growth in Barbados will remain tepid in 2016, though it will represent a modest improvement over recent years. Concerns
over the Zika virus will weigh on tourism, while fiscal austerity will continue to temper overall growth over the coming years.
Balance Of Payments... 16
Narrower Deficits Will Not Offset Weakening Credentials16
Barbados' external accounts position will improve over the coming years as its tourism sector expands and weak domestic conditions
limit imports. Although a narrower current account deficit will reduce external debt accumulation, Barbados will continue to face
weakening sovereign credentials.
Chapter 1.2: 10-Year Forecast - Barbados... 19
The Barbadian Economy To 2025... 19
A Decade Of Weak Growth Ahead...19
Barbados will struggle with slow growth over the coming decade, as wide current account and fiscal deficits undermine the country's
ability to invest in expanding capacity. Tourism will remain a primary driver of economic activity, though the sector's growth will be
Chapter 1.3: Political Outlook - Barbados 23
Domestic Politics. 23
Opposition Unlikely To Halt Fiscal Consolidation.23
After a failed no-confidence vote, no significant obstacle remains to Barbados' fiscal consolidation policy from within government.
However, slow economic growth will fuel public discontent with austerity, likely requiring modest changes in policy in the coming
Long-Term Political Outlook... 24
Social Stability And Drug Trafficking Greatest Challenges To Political Stability...24
Well-established democratic institutions, strong policy continuity and limited external threats will maintain broad political stability in
Barbados over the coming decade.
Chapter 2.1: Economic Outlook - Guyana 27
Balance Of Payments... 27
Current Account Deficit To Narrow On Rising Commodity Prices...27
Guyana's current account deficit will narrow in 2016 and 2017 on the back of an improved trade balance. This will combine with
continued growth in Guyana's financial accounts surplus to narrow the overall balance of payments deficit and moderate the decline in
Guyana's gross international reserves.
Fiscal Policy And Public Debt Outlook.. 29
Government Infrastructure Program Will Continue To Increase Fiscal Deficit...29
The Guyanese government's spending plans to improve the country's infrastructure and social welfare will continue to increase to the
fiscal deficit.
Chapter 2.2: 10-Year Forecast - Guyana.. 31
The Guyanese Economy To 2025... 31
A More Difficult Decade For Growth31
In the coming decade, Guyana will face broad-based macroeconomic deterioration with weaker growth, widening current account
deficits and rising fiscal account shortfalls.
Chapter 2.3: Political Outlook - Guyana... 35
Domestic Politics. 35
Political Risk To Make Modest Gains..35
Improving social stability will modestly improve Guyana's short-term political risk outlook over the coming months.
Long-Term Political Outlook... 36
Social Challenges And Security Threats Weigh On Outlook36
Guyana will face a number of significant social obstacles over the course of our 10-year forecast period, such as ethnic tensions,
policymaking deadlock and high levels of poverty.
Chapter 3.1: Economic Outlook - Jamaica... 39
Monetary Policy 39
Rising Inflation Will Drive Rate Hike In 2017..39
The Bank of Jamaica will maintain its accommodative monetary policy through the end of the year, in an attempt to bolster headline
GDP growth in a low inflation environment. However, the bank will raise rates in 2017 as inflation picks up.
Economic Growth Outlook.. 40
Brexit Will Weigh On Tourism Receipts..40
The decision by UK voters to leave the European Union will adversely impact the trajectory of Jamaica's tourism industry, given that
visitors from the UK, were seen as a potential growth area.
Chapter 3.2: 10-Year Forecast - Jamaica. 43
The Jamaican Economy To 2025 43
Government Reforms To Support Stronger Growth..43
Under the guidance of the IMF, the Jamaican economy will begin to consistently post positive growth figures over the coming decade.
Chapter 3.3: Polical Outlook - Jamaica... 47
Domestic Politics. 47
Consensus On Policy Direction Will Drive Legislative Progress.47
Broad consensus between Jamaica's two major parties will allow for successful cooperation on a wide range of issues.
Long-Term Political Outlook... 48
Social Challenges To Foment Most Pressing Political Risks...48
We expect that general agreement among Jamaica's political leaders regarding policy direction will promote political stability over the
coming years.
Chapter 4: BMI Global Macro Outlook... 51
Global Macro Outlook.. 51
Brexit To Hit Global Growth.51

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