Ingraham Admits Global Crisis Hurting Caribbean

Friday, 24 July 2009 06:05 Lisa Wells
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The most serious impact of the global financial and economic crisis on the smallest Caribbean economies, including The Bahamas, has been the downturn in the tourism industry, The Bahamas' Prime Minister Hubert Ingraham has said.

"Those countries that rely heavily on the North American market as a source for their visitors, like The Bahamas, were impacted earlier," he said. "But as the global economic downturn enveloped Western European and Asian markets, all Caribbean tourism economies, like those of Barbados and the Organisation of Eastern Caribbean States, have suffered widespread retrenchment."

Ingraham was speaking at the Regional Forum on the Occasion of the Inter-American Development Bank's 50th Anniversary in Port-au-Prince, Haiti.

The forum focused on the Economic Transformation and Strengthening of Caribbean Economies in Challenging Times.

Despite serious discounting and other incentives offered in the travel and hotel sector, hotel occupancy levels remain well below levels achieved last year by all of the Caribbean tourism economies, he revealed.

"The impact of reduced visitor numbers is being felt in all tourism-related businesses including food and beverage, beach sports, handicraft and souvenir sales, ground transportation, land and sea excursions and tours, luxury shopping and entertainment," he said. "And suppliers to the sector are similarly severely negatively impacted."

The impact of the international economic crisis on the Caribbean and The Bahamas has resulted in the slowdown in new construction whether of hotels and resorts, vacation homes, other business, or commercial buildings, he explained to the delegates attending the Forum.

"As in more developed economies, construction serves as a bell-weather for the state of the economies of small Caribbean economies.

"The slowdown in construction in our region has signalled reduced foreign direct investment inflows with implications for foreign reserves," Ingraham said. "Inevitably, the slowdown in important economic sectors is contributing to an increase in unemployment."

In The Bahamas, the decline in tourism arrivals has led to lay-offs in the hotel sector of the order of 2,200 and that amounts to more than one per cent of the country's labour force, he said.

These numbers do not convey the full story, he added. The tourism sector provides employment for thousands of independent entrepreneurs who make a good, if not lucrative income, such as taxi drivers, tour operators, souvenir and craft artisans and musicians.

"Such shedding of high wage earning labour is likely to have a downward multiplier effect on other sectors as a result of the fall in aggregate demand."

The Bahamian economy is expected to contract by 3.9 per cent in 2009, he confirmed.

Source: The Jamaica Observer