Contributing Writers: Azad Ali, Tangerine Clarke,
George Alleyne, Nelson King,
Vinette K. Pryce, Bert Wilkinson
GENERAL INFORMATION (718) 260-2500
Caribbean L 10 ife, March 6-12, 2020
By Anis Chowdhury &
Jomo Kwame Sundaram
SYDNEY and KUALA
LUMPUR, March 4, 2020
(IPS) – As the outbreak
of the novel coronavirus
COVID-19 threatens a global
pandemic, major stock
markets around the world
have suffered their worst
performance since the 2008
financial crush.
Growth disruption
The OECD has warned
that the coronavirus outbreak
could halve global
economic growth this year
to 1.5 percent, the slowest
rate since 2009. It has cut
its 2020 growth forecast for
China to a 30-year low of
4.9 percent, down from 5.7
percent in November.
The IMF downgraded its
growth forecast for China
to 5.6 percent in 2020, its
lowest since 1990. Economists,
polled by Reuters
during Feb. 7-13, expected
China’s economic growth
to slump to 4.5 percent in
the first quarter of 2020,
down from 6 percent in the
previous quarter, the slowest
since the financial crisis.
Meanwhile, China’s manufacturing
sector tumbled
in February, as many factories
remained closed after
the annual lunar new year
break. The Manufacturing
Purchasing Managers
Index (PMI), a widely used
measure of factory activity,
plunged to a record low
in February, reflecting the
sharp contraction.
The World Trade Organization
(WTO) head expects
the coronavirus epidemic
to greatly slow the global
economy, as China accounts
for 19.1 percent of global
GDP using purchasing
power parity (PPP), or 17
percent at current exchange
rates, 13 percent of global
trade, and 28 percent of global
manufacturing output
in 2018.
Impact on
developing
economies
Developing countries,
especially those dependent
on commodity exports and
global supply chains, are
particularly vulnerable.
The impact is expected
to be more severe for the 21
African countries the IMF
sees as ‘resource-intensive’,
where growth had already
slowed to about 2.5 percent.
Trade between Africa and
China grew 2.2 percent in
2019 to US$208.7bn, compared
with a 20 percent rise
the year before.
Even Latin America
counts China as its largest
overall trade partner.
The key downside risk is
further deterioration of the
commodity terms of trade.
The most exposed economies
are Chile, Peru and,
to some extent, Brazil.Asian
developing countries linked
to China through supply
chains, raw material exports,
investment and tourism are
especially vulnerable, while
other Asian giants, Japan
and South Korea, have also
been hit by the virus.
Global supply chain
disruptions
The virtual shutdown of
the ‘factory of the world’ has
slowed the supply of products
and parts from China,
disrupting production the
world over. Apple’s manufacturing
partner in China,
Foxconn, is experiencing
production delays, while a
Lombardy electronics factory
was forced to close by
the Italian authorities due
to an outbreak.
Some carmakers, including
Nissan and Hyundai,
have temporarily closed
factories outside China due
to parts supply shortages.
European manufacturing
could suffer considerably
due to its extensive links
with China through supply
chains. Already, four of the
world’s biggest carmakers
are expected to shut down
European production.
Meanwhile, 94 percent
of Fortune 1000 companies
are facing supply chain disruptions
due to the coronavirus.
Even the pharmaceutical
industry is expected to
face disruption.
For the Harvard Business
Review, “the worst is yet to
come,” expecting the Covid-
19 impact on global supply
chains to peak in mid-
March, “forcing thousands
of companies to throttle
down or temporarily shut
By Ding Ding & Inci Otker
Ding Ding is deputy division
chief, Caribbean 1 Division,
Western Hemisphere Department
(WHD) at the International
Monetary Fund (IMF), & Inci
Otker currently works at the
Western Hemisphere Department,
IMF and is mission chief
for St. Kitts and Nevis & Trinidad
and Tobago and Division
Chief of Caribbean III.
WASHINGTON DC, Feb. 7,
2020 (IPS) – The Caribbean
economies have long recognized
the value of working together.
Improving regional integration
— for instance, through
more intraregional trade and
policy coordination—can help
the region’s small-size economies
build greater resilience
and scale, as well as enhance
bargaining power on the global
stage.
According to the latest IMF
research, further liberalizing
trade and labor mobility in the
region can generate significant
economic benefits—potentially
over 7 percent of the region’s
GDP in 2018.
While policymakers of the
Caribbean Community* (CARICOM)
remain committed to further
integration and progress
has been made, the implementation
of integration initiatives
and policies toward the goal of
a regional economic union has
been slow and needs to be accelerated.
Work in progress
Compared to other well-integrated
regions, like the ECCU
and EU, the Caribbean lags.
The integration indices, which
measure the degree of intraregional
economic and institutional
integration, suggest that
Caribbean community’s integration
has proceeded in several
waves, with periods of integration
followed by slowdowns in
progress, including in removing
remaining tariff and non-tariff
barriers to trade and constraints
on intraregional labor movement.
Financial integration has proceeded
faster with tightly-interconnected
financial systems
across the region, but capital
markets remain underdeveloped
and fragmented. Harmonizing
economic and structural policies
to support a single economic
space is still work in progress,
with lacking harmonization
and coordination of investment
codes, tax incentives, and macroeconomic
policies.
Pain points
Why has progress in regional
integration been slow for the
Caribbean? A combination of
institutional, political economy,
and structural factors underlie
the slower implementation of
integration policies.
The lack of a regional body
with powers and accountability
that can help transform com-
OP-EDS
Although the
economic
consequences
of the COVID-19
outbreak require
a global response,
multilateralism
is in disarray. As
if to underscore
its growing
irrelevance, the
G20 missed
an important
opportunity to
provide leadership
at its Feb. 22-23
finance ministers’
meeting in Riyadh,
Saudi Arabia.
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the right to edit all submissions.
Continued on Page 11
Continued on Page 11
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Coronavirus exposes global
economic vulnerability
Strengthening
Caribbean regional
integration
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