By Caribbean News Global contributor
CASTRIES, St Lucia – According to the press release from the Office of the Prime Minister (OPM) on Friday, October 27, 2023, “when businesses grow, so does the economy,” announced that the “department of finance forecasts a real GDP growth rate of 3.2 percent for 2023 and projects 5.2 percent real GDP growth for 2024.”Notable, indicators do not support the projected 5.2 percent GDP.“
– Notable, the projected 5.2 percent GDP is not supported by indicators.
In Saint Lucia’s economy, the factors for increasing potential GDP and ‘talking Kweyol’ this festive season are as controversial as market weakness, geopolitics and significantly higher prices.
Saint Lucia is still in economic recovery mode post-COVID-19, and subject to an explanation of particulars in terms of recovery, the functionaries to unsubstantiated information is the subject of speculative performance.
Saint Lucia’s budget 2023/2024, reads: “Saint Lucia’s 2022 GDP has shown a real growth rate of 18.1 percent, the best-performing sectors were the agriculture, manufacturing and tourism sectors in 2022. And the largest contributors to real growth were in the accommodation and restaurant sectors.”
An annual GDP growth rate of 2.3 percent is considered normal, measured in terms of the increase in aggregated market value of additional goods and services produced, in capital goods, labor force, technology, and human capital.
GDP is formulated as consumer spending, business investment, government spending and net exports.
Talking Turkey – Talking Kweyol
The OPM communication heading into a “Jounen Kweyol” festive weekend, seems more psychological than practical to motivate than usual, amid escalating crime, [detrimental to economic growth] increased taxes of 2.5 percent and significantly higher food and beverage prices.
The other is the equivalent of “talking turkey” as celebrated this weekend is “talking Kweyol” while full of regrets and sick to one’s stomach.
In the article ‘manufacturing and construction sectors out-performed 2022 so far, says Export St Lucia’ Caribbean News Global (CNG) contributor, noted:
“The lack of transparency and public data that telegraphs the conclusions and projections being made by state agents is very troubling. There seems compliance with a very disturbing trend of selective secrecy. Successive governments and agents of the state, have gotten too comfortable making projections and wild statements without substantiating data.”
The CNG article also inquired: “Is this all about political and/or economic manipulation?
The same has materialized with the department of finance forecasts [… per the OPM release] lacking any data, economic performance, statistical analysis or brevity of efficiency that substantiates “5.2 percent real GDP growth for 2024.”
The expected GDP has thus far failed to indicate major segments of the economy that have registered economic growth; and at least one major sector of the economy that is likely to sustain protracted growth. For example, is it: manufacturing, agri-business, tourism, financial services, telecommunications, construction, micro-enterprise (SMEs), technology (AI), fuel tax ($70M plus) 2.5 health and security levy ($33M), increase export demand and/or the talk shop of misinformation?
The inadequacies in Saint Lucia are distant to just a mere statement of claim to GDP forecasts, against the backdrop of daily complaints of sloppy telecommunications, internet penetration and services, bad road networks, low productivity, food shortages (bananas, water supply, sugar, rice, etc), infrastructural and projected development to mitigate dwindling employment, should limit the partisan squawking and propose ideas to growth.
The arguments and the status quo – with regards to the current course of economic growth and development in Saint Lucia is not going to reach the goal of sustainable jobs and economic growth.
To facilitate projected investment, a new economic approach to reform the current course of social and economic growth is especially important for serious investors.
Factors of production such as land, labor, capital and entrepreneurship are building blocks of an economy. Each with a diverse policy formulation to increase potential GDP. The danger is the wariness of self-interested political boosterism not associated with economic fundamentals and fast world-changing developments.
Forecasted GDP growth rates are likely to be positive if businesses are growing and creating jobs for greater productivity. Then there are private and capital investments inclusive of governments practical forecast.
Saint Lucia is experiencing a period of contraction as businesses hold off on investing and hiring. Personal spending has declined as consumers have less money to spend. There is a growing social dependency on remittances and government handouts.
The backdrop of this supports weakening global demand, high inflation, aggressive interest rate hikes, increased taxes of 2.5 percent and significantly higher prices [services, produce, and products] this year.
The timing of the apparent government forecast seems more posturing – if validated by a survey and supposedly people telling pollsters what worries them.
“The Business Performance Survey conducted by the Chamber of Commerce, Industry and Agriculture in June 2023 confirms that 65 percent of respondents forecast increased business profitability over the next 12 months. Seventy-four percent of respondents attempted to recruit additional workers between January and March 2023. More than half of the respondents say 2023 is better than 2022.” ~ OPM.
While the exchange of 5.2 percent projected growth is relative to the vagaries of domestic, foreign and economic policy to daily living, the general sense of present and future affordability and quality of life is paramount.
There is also real concern about how governments use the information they gather and the potential misuse, knowing government political agents and proxies are all too eager to misuse information. There are also instances where the government, their agents and proxies do not comprehend the information and the situation. Thus being misled, all together.
In the midst of what economists define as the factors of economic growth, the OPM press release said:
“Prime Minister Philip Pierre has delivered an encouraging economic performance in the face of historically high inflation, interest rates and volatile commodity prices in the global economy; leads a cabinet of ministers and heads a government that has fertilized the local economy with sound economic policies to empower startups and new businesses and help existing companies grow and expand their operations.”
Saint Lucia’s government fiscal policies [the addiction to borrowing and spending] healthcare and national security are the greatest threats. The two political parties need to begin working on this crisis immediately, rather than being comical and insolvent.
Meanwhile, Saint Lucia’s overall market weakness and volatile fluctuations in commodities are expected to create more uncertainties. The growing political tension is expected to compound misinformation, market weakness, low productivity and price increases. The infamous record of 72-plus homicides is a deadweight in a country with a dysfunctional police force, that needs dismantling not rebranding.
Saint Lucia is likely to remain weak in the political sphere, inclusive of policy and economic dimensions to influence the GDP building blocks of the economy.