ECCB Governor Warns of Global Recession Impact on OECS Countries

Introduction to the Issue

BASSETERRE, St. Kitts, CMC—The Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine, has warned that a global recession will “reverse” the economic programs of countries within the Organisation of Eastern Caribbean States (OECS).

Antoine told the ninth Annual Growth and Resilience Dialogue, which ended last weekend that the most immediate concerns facing the ECCB member countries are inflation and a slowing global economy occasioned by the tariff war.
Timothy Antoine

Tariff War and Its Implications

United States President Donald Trump has announced far-reaching new tariffs on nearly all US trading partners, including a 34 percent tax on imports from China and 20 percent on the European Union, among others. Economists and other traders say the move is designed to dismantle much of the global economy’s architecture and trigger broader trade wars.

In the Caribbean, Trump announced a 10 percent tariff on most regional countries, while in Guyana, the tariff is as high as 38 percent.

The US president also announced plans to impose a one-million US dollar to US$1.5 million levy on all Chinese-made ships entering US harbors.

Impact of Inflation and Tariffs

Antoine said that inflation is a tax on everyone because it reduces the purchasing power of all. “However, it is a particularly pernicious tax on the poor and on our most vulnerable families, as well as on businesses, many of which are micro and small.

“Furthermore, the possible imposition of fines on ships made in China would increase shipping costs exorbitantly and also lead to significant price hikes on goods, including in the construction sector, with attendant implications for affordability and availability.”

The Central Bank Governor said this effect would pressure the fiscal situation of the OECS countries, some of which have recovered relatively well since the pandemic.

Current Economic Situation and Resilience

“Most of our economies are experiencing a strong rebound in Tourism, with arrivals now surpassing pre-pandemic levels. A slowing global economy or, worse yet, a global recession would reverse this progress. We hope this outcome will be avoided. The economic outlook is uncertain, and we do not know much.”

The ECCB serves as a central bank for Antigua and Barbuda, Dominica, Grenada, St. Kitts-Nevis, St. Lucia, and St. Vincent and the Grenadines. Anguilla and Montserrat are members of the Eastern Caribbean Currency Union (ECCU). All the countries share a common currency, the Eastern Caribbean dollar (EC), which is managed by the ECCB.

Antoine said that despite the prevailing situation, the EC dollar (One EC dollar=US$0.37 cents) remains strong.

Big Push Agenda and Future Plans

“At this moment, the backing is 98 percent, with foreign reserves of six billion EC dollars and growing. Our EC dollar has stood the test of time. Over nearly five decades, our EC dollar has withstood multiple shocks and will resist this tariff shock.

“Our confidence in this assertion is predicated on the ECCB’s longstanding conservative policy of maintaining high stocks of foreign reserves. We have long believed that our conservative approach provides a bulwark of resilience for our small, hyper-open economies and is a veritable insurance policy to help protect our region during shocks.”

As the COVID-19 pandemic attests, Antoine said, “This policy served us well then, and it is serving us well now and will continue to serve us well into the future.”

He said the current crisis must not be wasted, and the sub-region must emerge even stronger.

“As I often say, resilience is not merely the capacity to withstand and absorb shocks but to bounce forward, not back, forward,” he said, urging that the sub-region adopts a mindset that “reframes our current problems as opportunities and will propel our region’s lifelong pursuit of building greater self-reliance and resilience.”

Key Areas of Focus

Antoine also said that we need to “intensify our focus and implementation of the Big Push agenda, especially in pursuit of food and nutrition security and energy security,” and “accelerate the scope and pace of regional integration and collective action.”

He said the ECCU member states have considerable work to do to reduce their food import bill. He said that the ECCB, with the approval of the Monetary Council, recently disbursed a combined grant of EC$25 million to member countries to support them in their efforts to boost food production and reduce the region’s food import bill.

“Undoubtedly, more investments are required, especially concerning meat, grains, and fruits and vegetables, as they account for half of our food import bill. Now is also the time to revisit and diversify the logistics hubs for our region and our intra-regional shipping arrangements.

He also said that energy security is one of the pillars of the” Big Push,” noting, “We cannot transform our region without addressing the high energy cost.”

Reimagining the Tourism Model and Remote Work

Antoine also said there is a need to reimagine the sub-region’s tourism model, as high and low visitor arrivals are inevitable, but the goal is to minimize the duration and severity of the low seasons.

“Consider Singapore, for example, which is on track to surpass its record for international arrivals this year. What is the secret? Singapore ensures that every season is “Tourist season.” It enhances attractions, accelerates digital transformation, uses strategic marketing, and expands global outreach. These efforts help keep Singapore’s Tourism offerings relevant throughout the year.

“Approximately 980 million employees are working remotely worldwide. What steps can we take for the ECCU to become a remote work hub, offering an appealing environment and the necessary amenities?”

Data-Driven Actions for Success

Antoine said future success requires data-driven actions, noting that British mathematician Clive Humby coined the term “data is the new oil,” suggesting that, like oil, data must be refined and processed to unlock its actual value.

“Unfortunately, our region faces a significant data deficit and lacks the capacity to manage, process, and deliver data efficiently. A well-crafted data and AI (artificial intelligence) strategy are essential, not only to enhance operational efficiency but also to drive competitiveness in this increasingly fast-paced VUCCA (Volatility, Uncertainty, Complexity, Ambiguity, and Anxiety) world.”

Conclusion

Antoine said, as the global economic order fractures and restructures, “Will we come together to meet this moment? And will we do for ourselves what we can and must do for ourselves at home while we strenuously advocate abroad for just outcomes?”

“As a region, we cannot change our history, or geography,, but we can and must elevate our development trajectory through innovation and collective action,” Antoine added.

Frequently Asked Questions (FAQs)

Q: What is the current economic situation in the OECS countries?

A: The OECS countries are experiencing a strong rebound in Tourism, with arrivals now surpassing pre-pandemic levels. However, a slowing global economy or a global recession could reverse this progress.

Q: What is the Big Push agenda?

A: The Big Push agenda focuses on pursuing food and nutrition security, energy security, and accelerating regional integration and collective action.

Q: How can the ECCU become a remote work hub?

A: The ECCU can become a remote work hub by offering an appealing environment and the necessary amenities, such as digital transformation, strategic marketing, and global outreach.