Caribbean Export OUTLOOK 3rd Edition

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Pulse of the Caribbean

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here can be little doubt that developments in the global economic landscape over the past 18 months have radically shifted the terms of engagement for all countries within the global

trading system and more critically for the Small Island Developing States (SIDS) of the Caribbean. The decision by the region’s largest trading partner to impose billions of dollars in tariffs on imports from major country suppliers has served to upend the accepted norms of international trade craft, delicately negotiated among trusted partners, and introduces a new and virulent form of protectionism not seen in decades. Concurrently the UK's decision to leave the EuropeanUnion, where frankly it acted as a tenant at the best of times, has created unprecedented turmoil both within the UK and the European Union, placing all future trading relationships in jeopardy. The Caribbean finds itself caught in the crosswinds of an international trading environment where, having played by the rules, actively participated and abided by the tenets of the World Trade Organization (WTO) and been the first signatory to the reciprocal Economic Partnership Agreement (EPA) across the entire African Caribbean and Pacific Group, we now seem to be caught in a maelstrom not of our making and over which we have little control. This reality epitomizes the challenge faced by SIDS in navigating the new and emerging global economic realities. The Caribbean region is one of the most vulnerable regions in the world with arguably the highest debt to GDP ratio per capita; Barbados was at 175% inMay 2018 and the average across the region stands at over 70% debt to GDP. Additionally the impact of climate change has rendered the region increasingly vulnerable to devastating hurricanes evidenced by the devastation brought by hurricanes Irma and Maria in quick succession in September 2017. The island of Barbuda was rendered uninhabitable and Dominica suffered over 1.4 billion USD of damage, over three times the island’s GDP. The cost of rebuilding has set this small island nation back decades and the recovery has been slow and painful. Further exacerbating the economic challenges occasioned by trade wars, the Brexit-EU divorce and natural disasters, has been the extremely negative impact that “de-risking” has had on our ability to do business. This process instituted by some of the major international banks located in the region as well as correspondent banks who facilitate cross border transactions has directly affected the regional private sector in myriad ways, ranging from the inability to transfer remittances, the lifeblood of somany Caribbean economies, to a reduction in the ability to make payments for goods and services. This has presented an existential threat to the region’s banking and trading sectors and destabilized many regional economies. A final, seemingly unrelated issue, but in fact inextricably tied to the international trade agenda, has been the extraordinary rise in the percentage of the