CARIBBEAN ECONOMIC REPORT

IMF Real GDP Growth Statistics as at October 2015

GDP Growth %

October 2015

World
Advanced Economies
Emerging Market and Developing Economies

8.5

Latin America and the Caribbean

6.5

4.5

IMF Cuts Global and Regional Growth Forecasts

The IMF trimmed its global growth forecasts for 2015 and 2016 by 0.2 per-

2.5

centage points (pp) each, reporting that global growth this year is now ex2016f

2014

2015f

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0.5

pected to slip 0.3pp lower than 2014 to 3.1% in 2015, and accelerate to 3.6%
-1.5

in 2016. According to the IMFs World Economic Outlook (WEO) for October
-3.5

Source: IMF, RBC Financial (Caribbean) Limited

2015, growth in the Caribbeans tourism-based economies will soften slightly

from 2.4% in 2014 to 2.3% in 2015 and 2016, as they continue to benefit from
improved terms of trade and a recovering US and UK economy. The report

Caribbean Growth Forecasts for 2015 as at October 2015

showed that a 10% real decrease in oil prices, boosts real GDP growth in the

Real GDP growth %

-2.0

Trinidad and Tobago

Barbados

0.5

The Bahamas

0.5

first year by 0.2pp in tourism-based economies. This lift from lower oil prices

Sint Maarten

1.0

Curacao

1.0

Jamaica

would be compounded by stronger tourist arrivals and citizenship-by-

1.1

Suriname

1.5

St. Lucia

investment programs, countered by the impact of easier access to Cuba by US

1.8

Turks and Caicos

2.0

Cayman Islands

2.0

St. Vincent and the Grenadines

2.1

Antigua and Barbuda

2.2

Aruba

tourists, the possible competitiveness losses from real effective exchange

rate appreciation as the USD continues to strengthen, and higher US interest

2.4

Cuba

2.5

Dominica

2.8

Guyana

rates. Growth for the Caribbeans commodity exporters will continue decel-

3.0

Grenada

3.4

St. Kitts and Nevis

-2

-1

5.0
0

erate from 2.5% in 2014, to 2% this year, rebounding to 2.5% in 2016.

Source: IMF, S&P, various regional Central Banks, RBC Financial (Caribbean) Limited

Regional spillovers from Venezuelas crisis

According to the IMF, longstanding unsustainable macroeconomic policies in
Venezuela has given rise to widespread microeconomic distortions, inflation
projected around 200% in 2015 and 2016, a chronic shortage of goods, a black
market exchange rate over 100 times the lowest official exchange rate, and a
deep recession. Following a 4% contraction in 2014, the IMF expects Venezuelas economy to shrink further by about 10% in 2015 and 6% in 2016. The Caribbeans fuel imports via PetroCaribe are expected by the IMF to show further declines in 2015, the steepest of which (as a fraction of GDP) will be in
Guyana. Moodys reported that Venezuelas mounting external imbalances
have put pressure on investment flows to Cuba, given that Venezuela remains
Source : IMF WEO

Cubas main trading partner, and source of foreign direct investment.

Aruba Venezuela arrivals at highest level ever

Central Bank (CBA) data for August 2014 show inflation falling to 0.7% y-o-y,

Marla Dukharan

and official reserves expanding 30% y-o-y to USD760 million, which we esti-

Group Economist
RBC Caribbean
(868) 688-9845
marla.dukharan@rbc.com

mate at four months of imports. Stopover arrivals grew 14.8% y-o-y in August
2015 according to the CBA, driven mainly by a 50% y-o-y increase in arrivals
from Venezuela to reach 36,728 in Augustthe highest ever monthly total
from this source market, and second only to arrivals from the US.

Non-performing Loans : The Bahamas

% Non-performing / Total Loans

17.5%
17.0%
16.5%
16.0%

The Bahamas 2,000 Baha Mar related redundancies

The Central Banks (BCB) August 2015 report show stopover arrivals expanded
5% y-o-y, the average occupancy rate improved 4.3pp to 75.9%, and the average daily room rate (ADR) increased by BSD16.82 to BSD268.36. Cruise pas-

15.5%
15.0%
14.5%

senger arrivals fell 2.7% y-o-y however. Inflation accelerated slightly to 1.41%
y-o-y in August 2015, and after posting 29 consecutive weeks of y-o-y de-

14.0%

Jul-15

Jun-15

Aug-15

Apr-15

May-15

Jan-15

Mar-15

Feb-15

Oct-14

Dec-14

Nov-14

Jul-14

Sep-14

Jun-14

Aug-14

Apr-14

May-14

Jan-14

Mar-14

Feb-14

Oct-13

Dec-13

Nov-13

Jul-13

Sep-13

Jun-13

Aug-13

Apr-13

May-13

Jan-13

Mar-13

Feb-13

13.5%
13.0%

clines, foreign reserves grew 1.5% y-o-y at the end of August 2015 to
USD935.6 million, which we estimate at 2.5 months of imports. 2,000 Baha
Mar employees have been made redundant, which could have an impact on

Source: Central Bank of the Bahamas, RBC Financial (Caribbean) Limited

the unemployment rate, currently at 12%, and consequently the level of non-

Central Bank External Reserves : The Bahamas

USD Millions
1025

performing loans, which stood at 15 % of total loans in August 2015.

975
925
875
825

Barbados 2015 growth forecast trimmed to 0.5%

The Central Banks (CBB) Q3 2015 report showed growth at 0.3% y-o-y, down

775
725
675

from 0.5% y-o-y in H1 2015. The CBB is now projecting growth at 0.5% overall
for 2015, down from the 2% projection announced in January. This, despite

02-Jul-15

02-Mar-15

02-May-15

02-Jan-15

02-Nov-14

02-Jul-14

02-Sep-14

02-May-14

02-Mar-14

02-Jan-14

02-Sep-13

02-Nov-13

02-Jul-13

02-May-13

02-Mar-13

02-Jan-13

02-Sep-12

02-Nov-12

02-May-12

02-Jul-12

625

stopover arrivals growing 14.5% y-o-y to Q3 2015, driven mainly by 30% more
US and 18.6% more Canadian visitors, y-o-y. In spite of stronger tourism

Source: Central Bank of the Bahamas, RBC Financial (Caribbean) Limited

flows, USD reserves fell 8% y-o-y to USD489 million in September 2015, or 14

International Reserves : Barbados

USD '000

725,000

weeks of imports according to the CBB, as sovereign debt payments and the
675,000

subscription to the Latin American Development Bank (CAF) drove a net out625,000

flow of about USD89 million. Another factor possibly exerting pressure on USD
575,000

525,000

475,000

Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15

425,000

reserves is the extent to which the Governments fiscal deficit is being financed by the CBB. The Governments financing needs for the first half of
the fiscal year 2014/15 (April-September) was BBD289.7 million, of which the
CBB financed 82% or BBD237.4 million, according to data in the CBB report.
As a result, the CBB now holds just over BBD1.0 billion in Government debt

Source: Central Bank of Barbados, RBC Financial (Caribbean) Limited

Inflation rate : Barbados

roughly two-thirds in T-bills and one-third in debenturesor 8.8% of the total

9.58
9.46
9.40
9.21
8.86
8.43
7.79
7.09
6.49
5.81
5.12
4.53
3.89
3.50
2.96
2.63
2.35
2.14
2.12
2.16
2.07
1.98
1.91
1.80
1.82
1.70
1.72
1.70
1.69
1.69
1.68
1.70
1.69
1.75
1.79
1.89
1.87
1.74
1.58
1.38
1.20
1.04
0.82

y-o-y inflation (%)

10
9
8
7
6
5

months, from BBD555 million in December 2014, to just over BBD1.0 billion in
September 2015, the CBB report revealed. Such activity would normally exert
inflationary pressures, but based mainly on lower commodity import prices,

2
1

Jul-15

May-15

Jan-15

Mar-15

Sep-14

Nov-14

Jul-14

May-14

Mar-14

Jan-14

Sep-13

Nov-13

Jul-13

May-13

Jan-13

Mar-13

Nov-12

Sep-12

Jul-12

May-12

Jan-12

CBBs holding of Government debt therefore expanded by 81% in nine

Mar-12

public sector debt stock of about BBD11.5 billion in September 2015. The

inflation stood at 0.82% y-o-y in July 2015the lowest level since October
2004. Unemployment averaged 12% in H1 2015, according to the CBB. Once
again, the CBB stressed the need for declining productivity to be addressed.

Source: Central Bank of Barbados, RBC Financial (Caribbean) Limited

Employment Level : The Cayman Islands

# persons employed
Caymanian

Non-Caymanian

21,000
20,490

19,908

20,000

19,595

19,000

18,588
18,127
17,839
17,518

Cayman Islands Unemployment up from 4.7% to 5.6%

According to the Economics and Statistics Office (ESO), overall unemploy-

19,298

ment increased from 4.7% in 2014 to 5.6% in spring 2015, as unemployment

18,000

amongst Caymanians increased from 7.9% to 8.3%, and from 1.5% to 1.9%

17,000

amongst non-Caymanians. The total number of employed persons expanded

16,000

from 37,723 in 2014, to 37,900 in spring 2015. The population increased by

15,000

1.4% from 58,238 in 2014, to 59,054 in spring 2015.

17,410

17,144
16,493
15,969

2010

2011

2012

2013

2014

Source: The Cayman Islands Economics and Statistics Office, RBC Financial (Caribbean) Limited

Spring 2015

Cuba Stopover arrivals up 27.4% y-o-y in September

Reuters reported Cuba is late in settling foreign suppliers and external balances are deteriorating due lower commodity export prices, the impact of
the most severe drought in over 100 years, and softer monetary and fuel
flows from Venezuela. Oil shipments have declined from 100,000bpd in 2013,
to less than 70,000bpd currently, according to Moodys, who sees Venezuelas
deterioration a credit negative for Cuba. These developments all suggest that
the official 2015 growth forecast of 3.5% will likely be missed.

Curacao and St. Maarten Q2 growth in Curacao only

Net Official Reserves : Curacao and Sint Maarten

NAf Millions

2,400

The Central Bank (CBCSM) announced in its Q2 2015 report that Curacao rec-

2,300

orded 0.4% real growth and St. Maarten saw a 0.6% contraction, y-o-y in Q2

2,200
2,100

2015. Growth in Curacao was driven by higher private consumption, manufac-

lower exports. The growth in stopover arrivals was outstripped by declining

numbers from Venezuela. St. Maartens contraction was largely driven by

trade, transport, storage and communications.

1,800
1,700
1,600

Sep-15

Oct-15

Jul-15

Aug-15

Jun-15

Apr-15

Mar-15

May-15

Jan-15

Feb-15

Dec-14

Oct-14

Sep-14

Nov-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Mar-14

Jan-14

tivity, and the spillover effects on other sectors such as wholesale and retail

1,900

1,500

Feb-14

lower stopover and cruise tourist arrivals, weaker hotels and restaurants ac-

2,000

P
r
o
v
i
s
i
o
n
a
l

turing output, tourism activity, and public investment spending, tempered by

Source: Central Bank of Curacao and Sint Maarten, RBC Financial (Caribbean) Limited

Net International Reserves : Guyana

USD Millions

850

Guyana Reserves continue to decline, FX rate stable

800

Central Bank data show reserves falling to USD607.2 million in September

750

2015, which we estimate at roughly 3.5 months of imports.

700

650

Based partly on the roughly 10pp decline in total debt / GDP as a result of
Jamaica's liability management program for its PetroCaribe debt, S&P affirmed the rating at B, with a stable outlook. The government used USD1.5

Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15

JamaicaS&P affirms credit rating at B, outlook stable

600

Source: Bank of Guyana, RBC Financial (Caribbean) Limited

International reserves: Suriname

USD Millions

850

billion raised in the international capital market to purchase USD3.25 billion

800

owed to Venezuela under PetroCaribe.

750
700
650

Suriname Reserves fall below USD400 million

600
550

Net international reserves have declined for 29 consecutive months, falling

500
450

40% y-o-y in September 2015 to just under USD400 million, which we estimate

400

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Apr-14

Mar-14

Jan-14

350
Feb-14

at less than 2 months of imports, according to Central Bank data.

Source: Central Bank of Suriname, RBC Financial (Caribbean)

Trinidad and Tobago USD price and supply increase

The recent FY2015/16 budget announcement, for the first time in several

Net Official Reserves : Trinidad and Tobago

USD Millions

11,500
11,300

years, did not set a record for being the largest ever, and falls short of the

11,100

original FY2014/15 budget by TTD1.6 billion or 2.5%. The Government ex-

10,900

pects to earn 72% less energy revenue at TTD5.5 billion in FY2015/16

10,500

10,700

10,300

(woefully short of the usual TTD20-30 billion), and is simultaneously aiming

10,100
9,900

for a deficit of TTD2.8 billionthe lowest since FY2010/11. Growth is not

9,700
Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

Sep-14

Jul-14

Aug-14

Jun-14

May-14

Apr-14

Mar-14

Jan-14

energy prices, according to the budget. The number of employed persons is

9,500
Feb-14

expected to exceed 1.4% for the next two years, barring a strong recovery in

Source: Central Bank of Trinidad and Tobago, RBC Financial (Caribbean) Limited

falling, having declined by 20,400 in one year to March 2015, as unemployment increased to 3.7%, after having held at 3.3% throughout the latter half
of 2014. The government continued the phasing-out of the fuel subsidy by
increasing the prices of diesel and super gasoline by 15% each to TTD1.72 and
TTD3.11 per litre respectively. This is expected to save about TTD340.0 million, but the subsidy will still cost over TTD1 billion in FY2015/16. Gross public sector debt has been expanding in the double digits y-o-y since Q4 2014.
In Q2 2015, gross public sector debt grew by almost 18% y-o-y to TTD111.6
billion. An overall balance of payments deficit and the resulting loss in foreign reserves of USD720 million was incurred in FY2014/2015 according to the
budget. As proposed in the budget, the Central Bank (CBTT) announced a reestablishment of the pre-April 2014 foreign exchange distribution system. A
special injection of USD500 million was made on October 30 which saw the
TTD depreciate to roughly TTD6.40 : USD1.00. Total USD injections reached a
record monthly high of USD695 million in October 2015, bringing the y-t-d
total to just under USD2.5 billionan increase of just over USD1.0 billion or
73% over the same period last year. CBTT online data show reserves expanded 3.4% y-o-y to USD10.4 billion or 12 months of imports in August 2015.

Caribbean Economic Indicators

Popl'n
(000)

Y-O-Y
Gross
GDP
Public
Import
Nominal
GDP (USD Per capita Credit Rating & change Unemp. debt/GDP
cover
Bn)
GDP (USD)
(Outlook)
(%)
(%)
(%)
(months)

Aruba

107

2.6

24,402

The Bahamas

347

8.2

Barbados

274

Cayman

1.1%

7.6%

80.1%

4.1

0.7%

23,417 BBB- (Negative)

1.0%

12.0%

61.0%

2.5

1.4%

4.5

16,307

B (Negative)

0.3%

12.0%

134.3%

3.2

0.8%

59

3.0

54,338

Aa3 (Stable)

1.4%

5.6%

21.0%

n/a

-3.6%

11,300

77.1

6,848

Caa2 (Stable)

4.7%

3.5%

22.3%

n/a

1.2%

143

3.0

21,247

A- (Stable)

0.4%

13.0%

37.0%

4.2

1.5%

10,400

60.8

5,662

BB- (Stable)

6.2%

6.0%

46.0%

3.4

0.4%

ECCU

605

5.7

8,922

n/a

1.7%

20.0%

98.5%

8.0

0.8%

Guyana

756

2.7

3,596

Not rated

3.2%

11.0%

65.0%

3.5

0.5%

2,751

15.3

5,526

B (Stable)

0.6%

13.2%

125.0%

5.3

3.8%

43

0.8

19,333

Baa1 (Stable)

-0.6%

15.0%

22.0%

4.2

1.9%

541

5.1

9,339

BB- (Stable)

4.1%

9.5%

37.8%

2.0

4.3%

1,328

23.8

17,935

A (Stable)

-2.0%

3.7%

60.0%

12.0

4.0%

Cuba
Curacao
Dom Rep

Jamaica
St. Maarten
Suriname
T&T

BBB+ (Stable)

Y-O-Y
Inflation
(%)

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