Economist: Knock-on effect possible from rapidly changing US policies | Business

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Rapid changes in US policy that are currently being implemented by the Donald Trump administration could eventually have a downside effect on the US Federal Reserve (Fed), and will have a knock-on effect on economies in the Caribbean region, including The Bahamas, Vice President of Operations at the Caribbean Development Bank (CDB) Therese Turner-Jones said yesterday, during a panel discussion at the Global Interdependence Center’s Global Summit at the University of The Bahamas.

“That is something that’s going to occupy the Fed and other thinkers in the US, as to how these rapid-fire changes in policy, including letting go of federal workers, reducing US aid, just a whole plethora of really high-impact policy changes, how they could affect the way the US economy moves in the future,” said Turner-Jones.

“That’s going to have a knock-on effect in Latin America, the Caribbean and The Bahamas, because roughly 95 percent of our visitors come from the US and Canada.

“It’s going to have an impact. We know that whatever happens in the US, we’re just a sneeze away from the impact happening here. And it’s not just monetary policy, it’s trade, it’s inflation, it’s which goods we have access to, it’s technology. All of that, I think, will impact us in a strong way.”

Turner-Jones also noted that in the midst of economic uncertainty, this country continues to struggle with economic growth.

She explained that while the regional average for growth is 2.7 percent, The Bahamas is looking at about 1.5 percent growth over the next few years.

“For me, that’s not great and the minister knows some of the challenges with trying to get growth up in The Bahamas. A lot of it was outlined in the last International Monetary Fund Article IV consultation that was published just last month for The Bahamas, it pointed to some really interesting areas that I think we need to focus on,” said Turner-Jones.

“There are constraints in the tourism sector. We don’t have enough hotel rooms. We may not have enough airlift. We’re getting lots of cruise visitors, but we know that they spend 10 percent of a stopover visitor. So, when we look at those numbers, nine million sounds like a great number of visitors, but really, if only one-and-a-half million of those are actually staying in hotels, and that rate has been relatively flat for decades... we have to figure out, if we’re going to get nine million cruise visitors coming through, how can we figure out a way to get them to spend more money. That, I think, that’s the real challenge in tourism.”

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