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Barbados, Guyana and Jamaica Country Risk Report Q2 2016

Barbados, Guyana and Jamaica Country Risk Report Q2 2016

Core Views

We believe that the English-speaking Caribbean will continueto see a modest economic recovery in the coming quarters asUS growth continues. A strengthening US consumer will boosttourism to the region, driving growth in tourism-dependent economies.

Financial services will continue to struggle due to tightening financialregulation in developed economies, while lower precious metalsprices will weaken the macroeconomic outlook for the region’s miners.

That said, growth will remain stronger in the region’s mining-driveneconomies than in its predominantly tourism-driven countries.

Caribbean economies will continue to face economic headwinds inthe coming years in light of rising debt burdens, fixed exchange rateregimes, and modest growth prospects. These factors, combinedwith our view that financial services sectors will see a significantrecovery in the next few years, mean that we do not rule outadditional credit events or major balance of payments correctionsin some of the small island economies.
With indications that the Venezuelan government is moving towardan alteration in the parameters of its Petrocaribe programme, whichprovides subsidised oil imports to many Caribbean economies, thiscould send import bills much higher and potentially cause somecountries to default on their outstanding oil loans.

Major Forecast Changes

Government austerity measures will remain a significant drag on theeconomy in Barbados, as the government seeks to reduce its fiscaldeficit and substantial debt burden. We have downwardly revisedour growth forecast for 2016 from 2.3% to 1.0%. In 2017, we expecta modest acceleration to 1.6% growth as the government austeritymeasures ease slightly.

Increased extractive sector activity will bolster Guyana’s real GDPgrowth in 2016, with a number of new gold mines set to open andrising investment into the country’s nascent hydrocarbon sector. Weforecast that after an estimated 2.5% expansion in real GDP growthin 2015 (revised down from our earlier 3.5% estimate on the backof weak H115 data), Guyana will grow by 3.6% in 2016.


Composite Score
BMI Risk Index – Barbados
BMI Risk Index – Guyana
BMI Risk Index – Jamaica
BMI Index League Tables
Regional SWOTS
Regional Executive Summary
Core Views
Major Forecast Changes
Key Risks
Chapter 1.1: Economic Outlook – Barbados
Fiscal Policy
Austerity Will Yield Only Modest Results
Barbados will struggle to reduce its substantial debt load in the coming years as fiscal austerity measures yield only modest primary
surpluses.
TABLE: FISCAL POLICY
Economic Activity
Tourism The Major Driver Of Growth
Barbados will see only modest economic growth in the coming years, driven by an expanding tourism sector. Government austerity
measures will remain a significant drag on the economy, as the government seeks to reduce its fiscal deficit and substantial debt
burden.
Chapter 1.2: 10-Year Forecast – Barbados
The Barbadian Economy To 2025
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 1.3: Political Outlook – Barbados
Domestic Politics
Austerity Agenda Will Exacerbate Social Tension
Barbados’ ruling Democratic Labour Party will continue to benefit from a deeply divided opposition, ensuring that it is able to maintain
fiscal consolidation policies in the coming quarters.
Long-Term Political Outlook
Social Stability And Drug Trafficking Greatest Challenges To Political Stability
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
Economic Activity
Extractive Sector Investment Will Boost Growth
Increased extractive sector activity will bolster Guyana’s real GDP growth in 2016, with a number of new gold mines set to open and
rising investment into the country’s nascent hydrocarbon sector.
TABLE : ECONOMIC ACTIVITY
Balance Of Payments
Rising Gold Output Will Bolster External Account Position
Guyana’s current account deficit will narrow in the years ahead on the back of increased gold production, rising tourist arrivals and
robust remittance inflows.
TABLE: CURRENT ACCOUNT
Chapter 2.2: 10-Year Forecast – Guyana
The Guyanese Economy To 2025
A More Difficult Decade For Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 2.3: Political Outlook – Guyana
Domestic Politics
US Assistance Will Be Insufficient To Address Corruption
Greater US financial and technical assistance will aid in Guyana’s efforts to fight elevated levels of nacrotrafficking and stamp out
corruption.
Long-Term Political Outlook
Social Challenges And Security Threats Weigh On Outlook
Chapter 3.1: Economic Outlook – Jamaica
Economic Activity
Reform Agenda On Track
Jamaica’s longstanding cooperation with the IMF to put its economic house in order will continue to improve the country’s economic
outlook and business environment.
Mining Sector Outlook
Government Policies To Hurt Growth
Jamaica’s bauxite production growth will slow due to tax policy uncertainty, elevated local opposition to bauxite mining and low
aluminium prices over our forecast period to 2019.
Chapter 3.2: 10-Year Forecast – Jamaica
The Jamaican Economy To 2025
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
TABLE: SIMPLIFICATION A MAJOR THEME OF TAX OVERHAUL
Chapter 3.3: Polical Outlook – Jamaica
Domestic Politics
Policy Continuity Will Prevail Following General Election
Jamaica’s recently announced general elections, to be held at the end of this month, will be closely contested and centred on issues
crime, particularly the rising homicide rate.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Social Challenges To Foment Most Pressing Political Risks
Chapter 4: BMI Global Macro Outlook
Global Macro Outlook
Downside Risks Gather Momentum
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
TABLE: BARBADOS – MACROECONOMIC DATA & FORECASTS
TABLE: GUYANA – MACROECONOMIC DATA & FORECASTS
TABLE: JAMAICA – MACROECONOMIC DATA & FORECASTS

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