Nov 19, 2015 News
By Kiana Wilburg
Finance Minister Winston Jordan said, yesterday, that more worrying impediments to the progressive performance of the global economy have been identified. He noted that such a development should not be taken lightly as they can have an adverse effect on the economies of smaller countries such as Guyana.
He made this, among other statements, at the 47th Annual Monetary Studies Conference which was held at the Bank of Guyana.
Those who attended included Central Bank Governor, Dr. Gobind Ganga and representatives of the Caribbean Centre for Money and Finance.
Jordan said that it is eight years since the global economy experienced the worst economic and financial crisis in recent memory. Since then, he said, the global economy has struggled to achieve robust and balanced growth.
He said that the global economy, in the last year, has been characterised by divergence amongst major economies and differential performances between developed and emerging economies.
Overall, the Finance Minister said that global economic growth in 2014 was slower than expected at 3.4 percent for 2015. He said that it is now projected to be even slower at 3.1 percent.
Jordan said that this performance was underpinned by stronger growth in advanced economies, but more so in the United States and the United Kingdom, with the European Area and Japan registering smaller improvements.
In contrast, the Finance Minister disclosed that emerging and developing economies registered slightly slower growth of 4.6 percent in 2014. They are expected to slow further to 4.0 percent in 2015, with Latin America and the Caribbean recording the most significant deterioration in growth.
He said, “Risks to global growth prospects are now mostly weighted on the downside and more significant than they were in the first half of 2015. These risks include potential spikes in oil prices above the prevailing low prices and disruptive financial asset price shifts, driven by expectations about the monetary policy stance of major economies.”
The Finance Minister continued, “This can cause a reversal in capital flows to developing countries, including ours, which are highly dependent on Foreign Direct Investments to spur growth. Other risks include the further strengthening of the US Dollar against other major currencies, related to expected interest rate and growth changes.”
He added, “This implies huge challenges for portfolio management and real exchange rate appreciation, along with its negative trade implications in some emerging and developing countries.”
Additionally, the Finance Minister said that increased geopolitical risks, the possibility of stagnation in Europe and Japan and slower growth in important emerging and developing countries, which is caused by adjustment and low commodity prices, could dampen global growth prospects, with attendant implications for the region’s economies, which are susceptible, given the high degree of openness and dependence on the rest of the world.
Jordan explained that the 47th edition of the conference gives an idea of the longevity and resilience of this gathering of economists.
He said that over the last decade, the conference has explored a plethora of themes, including: regional economic integration; building financial sector resilience in the Caribbean; financial stability, crisis preparedness and risk management in the Caribbean; financial stability debt and economic growth; and macro-prudential supervision, financial stability and monetary policy.
Jordan noted that these themes have all focused on the pressing issues of the day – issues with which the region has had to grapple in its quest for growth and development.
The theme for this year’s conference is entitled “Financial Development and Economic Growth”.
Issues of ‘financial development’ and ‘economic growth’, which, incidentally, have been at the centre of policy dialogue at all levels, have always been pressing ones for the region, said the Finance Minister.
He said that this is evidenced by the voluminous literature on the two subjects. The economist said that it, therefore, comes as no surprise that they, once again, will be gaining the attention of this distinguished group over the next three days.
Jordan said that sub-themes of this conference will cover areas such as: links between Financial Development and Economic Growth; Financial Development and Financial Stability; increasing Global Financial Integration and Financial Development; Financial Development and the Efficiency of the Savings/Investment Nexus; the Dimensions of financial Development; and economic Structure and Financial Stability.
He said that these are areas in which we have important policy challenges and I look forward to your discussions, leading to real solutions to the myriad problems being faced. He said however that he is confident that deliberations would be interesting and productive.
The Finance Minister said that the conference could trace its lineage to the creation of the Regional Programme of Monetary Studies (RPMS) in 1968 as a partnership between the central banks of CARICOM and the Universities of the West Indies and Guyana.
He noted that the birthing of the Regional Programme of Monetary Studies was to facilitate high quality research in monetary, financial and central banking issues in the region.
Jordan said that two of the original researchers in the Regional Programme of Monetary Studies are NICIL Chairman, Dr Maurice Odle and GuySuCo’s Chairman, Professor Clive Thomas. The list of Guyanese researchers also include Professor Compton Bourne and Dr. Havelock Brewster.
The Finance Minister said that over the years, the Programme has adapted and evolved, making it relevant to the current environment. He said that first, came the Caribbean Centre for Monetary Studies (CCMS), in May 1995, with a broader financial sector mandate. Then, in May 2008, the Caribbean Centre for Money and Finance (CCMF) was formally launched.
These changes he said, were in keeping with the trust to focus on research that is relevant and timely and with applicability to the region’s financial issues .
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