IRR-Caribbean Mid-Year Viewpoint 2015 Local Market Report
In this 2015 mid-year report, we analyze the major sources of economic influence to the Caribbean region; namely tourism, real estate, development and investment. Data continues to reflect improvement in tourism, gradual improvement in some real estate markets and an increase in foreign direct investment inflows; though conventional economic indicators such as declining oil prices, sovereign debt ratios and unemployment numbers are resulting in continued stagnation of the larger diverse economies.
Growth in the greater region of Latin America and the Caribbean (LAC) slowed to 0.9% in 2014 due partly to lower prices for oil and other commodities as well as challenging domestic business climates and widespread droughts in South America. While South America was deeply affected by the oil price decline and other macroeconomic challenges, the faster developing Central and North America, along with the Caribbean, benefited from the strengthening United States economy, and saw an improvement in economic activity.
A June 2015 report issued by the World Bank notes forecasted growth for the overall region to an average of 1.7% in 2015–17 based on the ongoing recovery among some of the advanced countries. The report indicates projected growth in the Caribbean of about 3.7% in 2016–17, with negative internal fiscal issues being mitigated by stronger external demand and continued tourism growth, which saw record highs in 2014. These projections differ considerably from the UN’s Economic Survey of Latin America and the Caribbean (ECLAC) 2015, which recently released predictions that the Caribbean will grow just 1.7% in 2016. ECLAC projects that the region’s leaders in growth will be Panama (6%), Antigua and Barbuda (5.4%) and the Dominican Republic (4.8%).
Meanwhile sovereign debt ratings in some Caribbean countries continue to be downgraded; particularly in Puerto Rico where the General Obligation and Guaranteed bonds were downgraded by Moody’s to Caa3 from Caa2. This comes on the heels of the announcement by the governor of the territory that Puerto Rico will not be able to meet its long term debt obligations. Moody’s also downgraded the government bond rating of Trinidad and Tobago from stable to negative (from Baa1 to Baa2), on the basis of declining oil prices and limited economic diversification.
Foreign Direct Investment (FDI) inflows to the Caribbean Small Island Developing States (SIDS) accounted for 78% of total inflows to the region in 2014, as a result of mergers and acquisitions and other financial services; according to UNCTAD’s recently released 2015 World Investment Report. Although the Bahamas, which has the highest GDP per capita amongst the sovereign countries in the Caribbean; accounted for 19% of FDI to the region, Trinidad realized 27%. The report does not rank dependent territories such as most of the offshore financial centers, which receive some of the highest FDI inflows per capita in the world.
Download the full version PDF of this Local Market Report below. It includes graphs and tables.
IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.