WASHINGTON – The Caribbean has “the world’s highest energy costs,” which hinder its productivity, and so it is vital to develop new sources of power generation, as Jamaica and Dominica are doing, the Inter-American Development Bank said Sunday.
“Energy is one of the basic determinants in terms of productivity, affecting costs, and the Caribbean is facing the world’s highest energy costs,” said the chief of the IDB’s Caribbean Department, Gerard Johnson, in an interview with EFE.
As an example, Johnson emphasized that in 2014 the Caribbean paid an average of $0.45 per kilowatt/hour, compared to the 8 or 9 cents that “it costs in Miami.”
“If you take the hotel sector, very important in a region with a lot of tourism, one-third of the operating costs are based on energy. You can’t be competitive like that,” the IDB’s economist said.
The Caribbean’s dependence on its tourism sector is the highest in the world for any region, at 14 percent of its GDP.
Some countries, however, have GDPs that are even more dependent on tourism, including Jamaica with 25 percent, Barbados with 40 percent and The Bahamas with 50 percent.
Nassau, the capital of The Bahamas, will host the IDB’s annual assembly between April 6-10, which will be attended by ministers from all countries in Latin America and the Caribbean.
Johnson said that the Caribbean’s main problem “is that it’s not growing ... because productivity hasn’t increased,” while the opposite is true for other similar economies.
“We did very well after independence in the 1960s and 1970s. Then, we stagnated at the end of the 1980s and in the 1990s. ... We stopped being the best small open economies, and we’re seeing ourselves surpassed by other countries, like Mauritius,” he said.
In recent years, the Caribbean economy has been slowly recovering, growing 1.5 percent in 2015, after suffering the effects of the recession in the United States and Europe, where most of the tourist flows originate.
One complication for the economic recovery, however, is the fall in oil prices, where the effect on the Caribbean economy has been paradoxical.
“It’s been good for the countries, but really bad for the governments,” said Johnson, although he expressed optimism over the region’s future prospects.
Among the other issues to be discussed by the officials attending the assembly will be effects of climate change and its adverse impact on national economies.