ST. VINCENT (Jan. 13):- Prime Minister and Minister of Finance Dr. Ralph Gonsalves has said that economic recovery across the region “is going to be halting” even as he noted that the price of oil has risen to US$100 (EC$270) per barrel.
Gonsalves made the observations on Thursday, Jan. 13, as he consulted with Vincentians via radio about this year’s budget.
He said that St. Lucia’s was the only Eastern Caribbean Currency Union (ECCU) economy expected to grow last year, but only by 0.5 per cent.
“Overall, we are anticipated to have negative growth but our negative growth is better than the average for the region,” he said of the economy of St. Vincent and the Grenadines.
“Even though things are tight, we are doing better than most places in our sub-region, and, indeed, in our region,” he added.
Gonsalves said the instability of the finance situation was a lingering problem internationally.
“But, worryingly for us, is that even though the growth is not picking up, we are already seeing the price of oil rising — the Brent Crude … is about US$100 a barrel.”
Gonsalves said that while the Brent Crude price, a London figure, was a little more than the West Texas Intermediate, based on prices in the United States, the Brent Crude “better reflects the overall market for fuel”.
“Now that is a little worrying. People may say that demand is increasing that the world economy is probably revving back up [and] that’s why you are seeing an increase in the price of oil. But the economy is revving up on India, in Brazil, in China, in Russia. But from those countries, we are not getting tourists, neither are we getting remittances. So there is going to be a lag when that has a knock on effect in the economy. And that’s a challenge which is on the horizon,” Gonsalves said.
He further said the increase in fuel price is also to be blamed on a leaking pipeline in Alaska but added, “…there is a little more demand from these countries I am talking about and then the equity markets taking a little more risk and buying futures on the expectation that the price is going to go a little higher”.
“So, that’s an area where we have to watch. And, therefore, it suggests ever more that we have to conserve energy and look for renewable sources as much as we possibly can, which are policies of the government and inside the budget,” he said.