KINGSTON, Jamaica - IN recent years, the small states of the Caribbean have experienced low rates of economic growth, with the last rapid growth spurt in the 1980s that was fuelled mainly by expansion of tourism, banana exports and public investments.
The slowdown that started in the 1990s was triggered by the loss of trade preferences for sugar and bananas, higher oil prices and deterioration of the terms of trade, causing reduced fiscal space. The effective buffer has been remittances which have grown steadily despite the economic downturn in the US.
The limitations of these small economies have been compounded by adverse external economic developments. First, the frequency of natural disasters has taken its toll. Over the last 60 years, the Caribbean countries have suffered from 187 natural disasters and as a result have experienced losses equivalent to almost one per cent of GDP on average in damage each year. Second, there has been a global economic crisis since late 2008 that has restrained tourism and private foreign investment.