By Lesroy W. Williams Observer Reporter
(Basseterre, St. Kitts)”The Minister responsible for the public treasury, Dr. the Hon. Timothy Harris, said that from all predictability the global economic crisis will worsen in 2009 and that the Federation should brace itself for some economic fallout. The Finance Minister was at the time speaking at a press conference on December 9 to inform the population about matters pertaining to the current local and global economy. “The global economic situation is expected to worsen in 2009.” Indeed the World Economic Outlook is predicting global growth of 3% the lowest projection since 2002.” In 2007, global growth was 5%, in 2008 it moderated to an estimated 3.9%,” Dr. Harris said. “The USA is experiencing a recession. Joblessness is at an all time high.” Given the way our economy is intertwined with that of the USA and UK, it is not unreasonable to expect some economic fallout,” he said. Economic growth in the USA spurs economic growth in the Caribbean, Dr. Harris said. “Put another way – the USA’s market is more important to us, than our market is to the USA,” he said. He said that the vulnerable areas that can impacted significantly by the US recession are tourism, foreign direct investment, remittances, financial sector output and export manufacturing. In St. Kitts and Nevis, tourism contributes 20 percent of GDP; foreign direct investment contributes 25 percent; remittances contribute one percent; and the financial sector output contributes 14.1 percent, he said. “Take the tourism sector, the loss of wealth and drop in consumer confidence are impacting negatively on consumer expenditures.” Our hotel plants in St Kitts and Nevis are experiencing lower bookings now compared to this time last year.” Cruise arrivals still continue to be positive but there has been noticeable reduction in expenditure by visiting cruise passengers,” Dr. Harris said. “Already we know that the Four Seasons Hotel which is a huge contributor to tourist arrivals and tourist expenditure, will be out of service for 2009 Winter Season.” The loss of this is significant not only for Nevis where” Four Season contributes near 70% of tourism expenditure but to the entire Federation.” “Four Seasons with its 196 hotel rooms was the second largest hotel in the Federation.” Its high end passengers were significant to the meeting of desirable seat occupancy levels with major airlines and contributed in no small way to the profitability of those routes,” he said. “The reduction in arrivals and lower expenditure can lead to job losses in the tourism sector, reduced work week for employees, and lower revenues for government given the multiplier impact of tourism expenditure across the economy,” he said. “Workers should in these circumstances try to attain the highest level of performance and productivity.” Be flexible enough to perform other tasks than those to which they were customarily assigned.” Be flexible in the hours they are willing to work.” Be prudent in their spending.” Be encouraged to save.” In the event of lay offs make arrangements for rescheduling debt with their creditors,” Dr. Harris said.
