Opinion: All hands on deckPOSTED: 10/9/15 2:30 PM
While the political showdown plays out between the Council of Ministers and the parliamentary majority in the House of Parliament of Sint Maarten, this week the international community of nations were greeted with the news that 2015 will see lower growth when compared to 2014, and this is according to the International Monetary Fund (IMF) latest World Economic Outlook for global economies.
A modest pick-up in advanced economies and a slowing in emerging markets is forecast due to the weakness in some large emerging economies and oil-exporting countries.
Major global economic growth six-years after the world emerged from its broadest and deepest post-war recession, remains elusive. The IMF further reports that the downside risks to the world economy appear more pronounced than they did a few months ago.
Global real Gross Domestic Product (GDP) grew at 3.4 per cent in 2014, and the forecast for 2015 is to only grow at 3.1 per cent, but growth is expected to rebound to 3.6 per cent in 2016.
The 2015 challenges are being blamed on China’s economic transformation, away from export and investment-led growth and manufacturing, to a greater focus on consumption and services; the related fall in commodity prices; and the third one is an impending increase in U.S. interest rates, which can have global repercussions according to the IMF and add to current uncertainties.
Advanced economies, especially in North America are suffering from lower investment, unfavourable demographics, and weak productivity growth, while there is slower growth in emerging and developing economies.
The advice from the IMF is the need for policy-makers to raise actual and potential growth. 2015 marks the fifth straight year of slowing growth across the globe.
The World Bank reports in its latest semi-annual regional report, “Jobs, Wages and the Latin American Slowdown,” that four years of economic downturn are beginning to have adverse effects on jobs and household incomes in Latin America and the Caribbean.
Zero growth is forecast for 2015 with a slight improvement to 1 per cent in 2016, but there is high uncertainty with respect to this figure.
The report says that countries in the Region will have to adjust to the new realities of diminished export revenue; adjustments are needed to avoid excessive loses in economic activity and employment, with the key question being whether and how labor market conditions and income distribution will be affected in the months and years to come.
The World Bank report points out that, during the current slowdown, however, while the rate of unemployment has not risen appreciably so far, employment generation has stalled, the quality of employment has deteriorated, and labor force participation has dropped; particularly as young men have stopped looking for work, which could cause household income inequality to increase. In addition, while unskilled workers are seeing their wages decline less than those of skilled workers, their job losses have been much higher.
The report further adds that, this situation raises important policy implications, the report argues. Well-targeted safety nets can help cushion the impact of the economic downturn on those most affected. Also important to consider is the role of minimum wage legislations that helped raise labour income for low-skilled workers during the boom years, but may undermine employment generation during the downturn.
Much effort and attention on keeping our country Sint Maarten at the forefront in attracting new business, and maintaining existing business, has been our two ports of entry, Port St. Maarten and SXM Airport, both government owned companies that operate as private sector businesses.
However, the burden should not be left on them alone, but needs to be a shared and collective as we approach choppy economic waters that lay ahead in 2016. Our national budget has faced challenges during the past years, and those challenges will continue based on the recent information released from the IMF and World Bank where global growth is concerned.
Global challenges do trickle down to our local economy and we need to review and plan strategically on how to deal with the global slowdown and how to maximize opportunities for the upcoming season and beyond in moving Sint Maarten economically forward.
With the 2015/2016 tourism season just about to kick-off, we need all hands on deck to make an impression, not a depression.