While growth in Latin America and the Caribbean continued to decline for the fifth straight year, the region is still better off than in the past decade, says the president of the Inter-American Development Bank.
“The region as a whole, compared to a decade ago, has far less people in extreme poverty,” said Luis Alberto Moreno, the head of the hemispheric financial institution. “The challenge going forward is how in a lower growth environment do you preserve those gains that we achieved in the past?”
Finding the answers to that question against the backdrop of falling commodity prices, climate change and growing numbers of retirees, will be the focus of the Inter-American Development Bank’s annual meeting Thursday through Sunday in Nassau, Bahamas.
Finance ministers and central bank governors will discuss productivity, increasing infrastructure investments and making the best use of trade agreements. Another item high on the agenda is doubling the bank's climate-related financing.
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United Nations studies have shown that rising sea levels have the potential of wiping out airports in the Bahamas and elsewhere in the region. Meanwhile, the Economic Commission for Latin America and the Caribbean (ECLAC) estimates that between 2000 and 2014, natural disasters caused at least $27 billion in damages in the English-speaking Caribbean.
The Bahamas, for example, faced a major setback in 2015 after Hurricane Joaquin devastated its southeastern islands in late September and early October, slowing GDP growth. In August, Dominica’s Prime Minister Roosevelt Skerrit said a destructive Tropical Storm Erika, which killed at least 20, had set the Eastern Caribbean nation back 20 years.
But climate change isn’t the only concern. A strong U.S. dollar, reflected in falling commodity prices, is also leading to the devaluation of almost every country’s currency, increasing lending demands to the bank.
“You see more countries demanding faster disbursement kinds of loans, which are typically attached to government reforms, and to specific structure reforms that help raise productivity or social mobility,” Moreno said.
Another concern that will be raised during the gathering is technology.
“Latin America and the Caribbean missed the train of the Industrial Revolution,” Moreno said. “It’s important not to miss this train of the Technological Revolution, which means the linkages between education and innovation, the linkage to more bandwidth — those are the kinds of things we are looking into.”
This is the first time in 25 years that the bank will hold its annual economic summit in the Caribbean, which continues to face growth challenges even as tourism sets arrival and spending records.
“This is a very different Caribbean today,” Moreno said. “This is a window of opportunity to do some of the big structural reforms that Caribbean countries need so that they can get back into more sustainable growth.”
But one Caribbean nation that continues to be of concern is Haiti. Six years after its devastating Jan. 12, 2010, earthquake, the country’s economy continues to degenerate amid a political and electoral crisis triggered by its disputed elections, decreasing foreign aid and the gradual slide of its domestic currency.
“There has been a lot of slippage in the last two years of the previous government,” Moreno said. “The world has so many challenges that the number of donors and members of the international community that still have staying power in Haiti are far, far less and that’s a big issue.
“It is very important that the Haitian leadership deliver and whoever comes into government realizes that the only way to continue to keep the engagement that it has with the international community is to deliver on a lot of things, and the expectations that a lot of people have of Haiti,” he added.