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IMF: Higher Costs, Sluggish Growth to Impact Caribbean Destinations

IMF: Higher Costs, Sluggish Growth to Impact Caribbean Destinations

Posted by Shanelle Weir on January 06, 2015

Despite mounting pressure from other countries, the Caribbean once again spent 2014 ranked among the world’s most popular leisure travel regions. However, a new International Monetary Fund (IMF) report suggests higher costs and slowing arrivals growth will challenge Caribbean nations throughout 2015.

The IMF report, “Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals,” finds Caribbean tourism experienced “solid” expansion during the 2000s, driven by “steady growth in key advanced economies and strong inflows of foreign direct investment.”

The study charts data from Anguilla, Antigua & Barbuda, the Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Jamaica, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines. Countries including Guyana, Haiti, Suriname and Trinidad & Tobago were deemed to have “non tourism-based economies” and were not featured in the IMF study.

Not surprisingly, the study found the Caribbean to be “highly dependent” on tourism. Leisure travel “now accounts for a large share of gross domestic product” in the 16 countries tracked in the study, ranging from eight to 40 percent.

The Caribbean’s strong tourism growth continued in 2014 according to key regional groups. Arrivals in the first six months of 2014 increased 4.3 percent compared with the same period last year, said Caribbean Tourism Organization (CTO) Secretary General Hugh Riley.

In fact, some Caribbean destinations posted surging visitor growth in 2014. Belize, the Cayman Islands, Haiti, Grenada and the Turks & Caicos all posted arrivals growth of 10 percent or more last year according to CTO data. Aruba and the Dominican Republic both posted growth of more than nine percent in 2014, while Jamaica reached the two million visitor mark for the first time in its history while Aruba hosted one million visitors for the first time.

Still, IMF officials say the Caribbean continues to face daunting challenges. “In recent years, the [Caribbean’s] rate of growth in tourist arrivals has stalled, and the region’s share of the global market has been shrinking,” the report finds.

“Moreover, many Caribbean countries are facing significant macroeconomic imbalances as growth has slowed and public finances have deteriorated,” the report says. The Caribbean’s share of the global tourism market totaled about two percent in 2013 compared with 2.5 percent in 2000, says IMF.

The study also claims travelers to the region pay a premium compared with other warm-weather destinations. “The cost of an average one-week beach holiday in the Caribbean is higher than in other beach destinations around the world,” the report notes.

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