The cross currents have moved into 2016, knowing all too well that small island states and emerging markets are challenged politically and economically with growing concerns. Saint Lucia is no expectation, as life is about to get harder and living standards will take a further hit adjusting to geopolitical issues, market volatility and political leadership.
Accounting for weakness in emerging markets are commodities prices, led by the collapse in crude oil prices. Tensions between Saudi Arabia and Iran are not helping the situation either. And that’s not taking into consideration Iran and Libya’s oil outflows pending entry on the world market.
In the past 18 months, oil price has fallen by 75%, with cascading effects on investments, jobs and asset prices. Exploration and production company defaults are rising and banks are setting aside more money for risk mitigation. On the other hand, bargains in the energy sector will come about as large players buy out smaller players. The worst isn’t over by any means but there are parallels between the last oil crash of 1986 and the lowest crude oil price since 2003.
Consumers are perhaps overjoyed on cheap gasoline, riding a high, before prices stabilize US$70-80 ahead of 2017. The expectation is such that low energy prices benefit the economy. But this is not reflective in gross domestic product (GDP) as a general rule for 18 months. This remains less straightforward and perhaps a bit of a mystery while consumers and businesses seem savvy to reduce debt and pump up savings in view of one crisis after the other.
GDP comes from consumer spending, private investment, government spending, trade and commerce. The slow rate of growth in China is now targeted to 6.5 percent with approximately US$3.4 trillion in foreign currency reserves, and declining rapidly. Brazil’s recession is getting worse and Russia’s currency is at an all time low contributing to wild stock market performance even as global elites in Davos deliberated on “improving the state of the world”.
These challengers can potentially isolate the region as Asian tigers and western interests vigorously protect their interest.
In the region, oil producers are forced to buckle their seat belts, having spent like a boss when prices were high. There is enough blame to go around but, whatever the spectacle, tough times prompt self-examination. The difference is adjusting policy framework and core values while complying with internal and external commitments.
Addressing these challenges, account for a previous article published May 2015.
“Weathering the outlook to improvements, leaders and government have the opportunity to reboot policy frameworks, incorporate fresh ideas, new engagements, innovation and knowledge that are more diverse to influence the future of the region and build stronger economies. The opportunity to summon the will to act for the long term global challenges has gone wanting before in favour of binding constraints that placates voting blocs and preferred rhetoric that proves regrettable today. But this time, the sophistication is much more astute to managing headlines and the use of clever politics.”
In recent times Prime Minister Keith Rowley cautioned: “We must all appreciate that the circumstances we now face as a nation require sacrifice and managed adjustment in our living standards.”
But that’s just the tip of the iceberg as his government is forced to reduce spending by 7 percent and dip in the cookie jar ($1.5 billion from a stabilization fund), while hoping for an improvement in export revenue from oil and natural gas. In my view a deeper cut in public spending and budget expectation will become necessary to curtail the deficit. For the simple fact that the current situations is a protracted one requiring deep economic reform mechanisms and avert the International Monetary Fund already on standby.
Additionally, facing a surge in criminal activity and lawlessness, soldiers are currently re-engaged as a permanent fixture to law and order. This latest sway is not a good sign for economic confidence and to attract investment exponentially. Adversely this is a sure sign of anxiety that collapsing revenues could bring political instability and ignite the opposition.
Next door, Venezuela is politically and economic damaged and heading for a crash. Inflation is running upwards of over 200%, along with a weak currency and basic goods shortages. In turn, President Nicolas Maduro seeks new powers to tackle the “economic emergency”, blaming everyone but himself for an outdated political and economic model.
“There are two models, the neoliberal model which destroys everything and the chavista model which is centered around people.”
But that’s Maduro’s usual Pandora’s Box to explain why his government no longer has access to the kind of resources it’s been using to cajole political largess and client states.
Energy is central to emerging markets growth prospects and largess. Therefore you can well understand the economic emergency facing the Caribbean region plagued with mismanagement and corruption over the decades. This has obstructed the flow of jobs and investment, and contributes to making the current state of affairs worse. Further, it doesn’t look like this is going to change anytime soon, as political promises that seem to follow the false narrative and tribal emotions pandering to voters’ gullibility are alive and well.
Prime Minister Kenny Anthony recently said: “Looking back, there is much to be proud of, because Saint Lucia and its people have come a far way despite the challenges that confronted every situation… over the past year, government has further stabilized the country, brought in record tourism numbers and revenue, and began turning the economy around. NICE programme created thousands of jobs all across the country and investment is returning. And, now, people are beginning to feel that the future can indeed be better than the present. We have been bold; we have been strong. Together, we made the difference for our future.”
Actually, many find the expression “further stabilized the country” to mean pseudo/artificial and more disturbing to accepting policy pillars. If government has stabilized the economy with NICE programme and stay over tourism, then the related activities and revenues are not substantial. Moreover, economic outlook and strategies in construction, agriculture, and financial services seem lost in the equation. This leaves one to believe the economy is in more trouble than we’re made to believe.
Over the years, investing in people has been marginal to pull the country out of a chronic mess. Consider this, about 50% of working age adults are unemployed, 60% illiteracy, 23.5 % unemployment and 44% percentage youth unemployment. This is not only an acute worry but an original sin, prayers and an act of contrition alone will not solve. This is compounded by climate change vulnerability, protecting the environment, to issues such as food, water and quality sustainable growth.
The current energy crisis affords a huge potential to spur renewable energy development in conjunction with environmental issues and put to work the next generation of geologists, engineers and entrepreneurs.
However, this requires a balancing act, financing innovation for sustainability, and practical advice for implementation in a new post carbon economy in the region. And this likewise requires balls, guts and vision not current in the flock of leaders as evident in patchwork policy and diplomacy which has given rise to external intervention.
The circumstances surrounding IMPACS seemingly has met that threshold. But more importantly, this matter looms large on the economic front and on Saint Lucia as a sovereign state. Viewing the EU diplomatic corps press conference earlier this month (January) that schooled Prime Minister Kenny Anthony concerning foreign policy goals, national security provisions and objectives gave the impression of the resumption to colonial rule.
And contrary to the belief that “western imperialism” is the cause; those responsible cannot help feel evasive to duck bouncers (cricket balls) for socio economic pains that will grow more intense with additional challenges on a stagnant economy.
This is a vivid reminder that the political sway of the Saint Lucia Labour Party (SLP) and the United Workers Party (UWP) is a seesaw of pussyfoot arrogance and rickety bravado, loaded with credibility issues that are not well-matched to embrace reform for the future of Saint Lucia.
So, when thinking about strategy and confidence for the future, the discerning intelligence of our leaders leaves much to be desired. And to be the best, as island states ought to be.
And unless the isolated method of decision making is disconnected from political adolescence, and the myopia that makes it difficult to be honest, to receive constructive criticism and the hard truth, subsequently the juvenile spectacle of our “leaders” will become more frequent and absurd.
By Melanius Alphonse
Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality. He can be reached at: firstname.lastname@example.org