Bridgetown -- Jan. 31, 2010 -- Preliminary estimates indicate that economic output contracted in most regional economies in 2009, reflecting the lagged impact of the global financial crisis and economic recession.  Indications are that only four Borrowing Member Countries (BMCs) recorded positive GDP growth in 2009 – Belize, Guyana, Haiti and Montserrat.  Among the other BMCs, real GDP in Anguilla contracted by more than a quarter, after a prolonged period of high construction-led growth that was fuelled by FDI.  Antigua and Barbuda and Cayman Islands recorded declines that were in excess of 5%, while the real output contraction among most of the remaining BMCs was between 1 and 4%. 

The main transmission channels of the crisis to regional economies were sharply declining tourist arrivals and a fall-off in FDI, which negatively affected investment in tourism-related construction projects, reducing output and employment in both the tourism and construction sectors.  In addition, the financial crisis adversely affected offshore sector activity in all major jurisdictions and threatened the soundness and stability of regional financial sectors.  In the face of these exogenous shocks, Belize and Guyana have shown some resilience.  However, the majority of regional economies are highly dependent on tourism and other services and have therefore proved to be much more vulnerable.  

The associated impacts have been so adverse that these economies have had to seek external financing to mitigate the effects on foreign exchange reserves and liquidity levels in the banking system, as well as to improve fiscal and debt sustainability.  However, with credit ratings reflecting these impacts and global financing conditions remaining tight, countries have tapped the regional capital market and various financing facilities offered by the Multilateral Finance Institutions (MFIs) including the Caribbean Development Bank (CDB).  In addition, some countries have turned to non-traditional sources of financing for similar macroeconomic support, as well as for grant resources to finance development efforts.  Poised to become an additional source of development finance for the Region, the CARICOM Development Fund commenced operations on August 24th, 2009, marking a critical milestone in the regional integration process.