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Barbados, Guyana and Jamaica Country Risk Report Q1 2016

Barbados, Guyana and Jamaica Country Risk Report Q1 2016

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.

With indications that the Venezuelan government is moving toward an alteration in the parameters of its Petrocaribe programme, which provides subsidised oil imports to many Caribbean economies, this could send import bills much higher and potentially cause some countries to default on their outstanding oil loans.


"Regional Executive Summary
Core Views
Key Risk
Chapter 1.1: Political Outlook - Barbados
Domestic Politics
Little Opposition To Austerity Agenda
Barbados' ruling Democratic Labour Party will face little internal opposition to its austerity agenda in the coming year.
Long-Term Political Outlook
Social Stability And Drug Trafficking Remain Greatest Challenges
Well-established democratic institutions, strong policy continuity and limited external threats will maintain broad political stability in
Barbados over the coming decade.
Chapter 1.2: Economic Outlook - Barbados
Fiscal Policy and Public Debt Outlook
Additional Austerity Will Focus On Revenue Growth
The government of Barbados will continue to pursue debt reduction through fiscal austerity measures, driven by revenue increases in
place of significant expenditure cuts.
TABLE: FISCAL POLICY
Economic Growth Outlook
Austerity Measures Will Weigh On Growth
In the coming years, rising tourist arrivals in Barbados will boost employment and attract investment.
TABLE: GDP BY EXPENDITURE
TABLE: PROPOSED CONSUMER TAX CHANGES IN 2016
Chapter 1.3: 10-Year Forecast - Barbados
The Barbadian Economy To 2024
Q1 2016: A Decade Of Weak Growth Ahead
Barbados will struggle with slow growth, a wide current account deficit and weak government fiscal dynamics over our 10-year forecast
period.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 2.1: Political Outlook - Guyana
Domestic Politics
Dispute Over Territorial Boundaries Will Weigh On Investor Perceptions
Guyana's long-running territorial disputes with Venezuela and Suriname are likely to heat up in the months ahead.
Long-Term Political Outlook
Social Challenges and Security Threats Weigh On Outlook
Chapter 2.2: Economic Outlook - Guyana
Economic Growth Outlook
Extractive Sector Will Support Growth
Guyana's extractive sector will support growth in the coming years, despite an environment of low commodities prices.
TABLE: ECONOMIC ACTIVITY
Oil & Gas Forecast
Liza To Mitigate Natural Decline Rates
The fast-tracking of ExxonMobil's Liza project will help counter accelerating natural decline rates within a broad industry
downturn.
Chapter 2.3: 10-Year Forecasts - Guyana
The Guyanese Economy To 2024
Q1 2016: A More Difficult Decade For Growth
In the coming decade, Guyana will face broad-based macroeconomic deterioration with weaker growth, widening current account
deficits and rising fiscal account shortfalls.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3.1: Political Outlook - Jamaica
Domestic Politics
Security Reforms Still Making Gains, Despite Murder Uptick
Jamaica's efforts to reduce violence on the island have taken a step back in 2015, with increased gang activity contributing to a sharp
spike in murders.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Social Challenges To Foment Most Pressing Political Risks
We expect that general agreement among Jamaica's political leaders regarding policy direction will promote political stability over the
coming years.
Chapter 3.2: Economic Outlook - Jamaica
External Trade And Investment Outlook
Improved Terms Of Trade Will Reduce Current Account Deficit
Improving terms of trade, due in large part to lower oil prices, will support a narrowing current account deficit in Jamaica.
TABLE: CURRENT ACCOUNT
Economic Growth Outlook
Private Sector Will Support Uptick In GDP Expansion
Jamaica's economic growth rate will tick up in 2015 and 2016, on the back of an improved business environment and historically low
inflation.
TABLE: GDP BY EXPENDITURE
Chapter 3.3: 10-Year Forecasts - Jamaica
The Jamaican Economy To 2024
Q1 2016: Government Reforms To Support Stronger Growth
Under the guidance of the IMF, the Jamaican economy will begin to consistently post positive growth figures over the coming
decade.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: BMI Global Macro Outlook
Global Outlook
Exit The Dragon
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %

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