Global economic confidence on the rise despite challenges

This is great news for the region, reflecting positive business sentiment and confidence by consumers. Many parts of the Caribbean, most notably Trinidad and Tobago, suffered at the beginning of the year as commodity prices fell.

For this commodity producing nation in particular rich in petroleum, cocoa and citrus fruits to name a few, falling prices meant a loss of export earnings, jobs under threat and a currency crisis because it led to depreciation of the currency value, which is inherently underpinned by the worth of the commodity exports.

But despite the circumstances, the performance of other countries has been able to boost the region’s economic performance.

The Caribbean benefits well from its close proximity to the United States. Tourism is a major contributor to economic growth and visitors from the United States account for a large part of industry here. There were 14.3 million American visitors to the Caribbean in 2015 alone, representing nearly half of all arrivals, who have been benefitting from a stronger US economy.

The economies of the Caribbean are highly dependent on the US so their recent economic improvement bodes well.

According to GECS, confidence in North America improved during Q3, with only 32% of firms reporting they were less confident – down from 36% in the Q2. In fact, business confidence in the US improved for the third quarter in a row and is now at its highest level since Q2 of last year. The recent improvement in confidence coupled with strong employment growth and high core price pressures are all reasons to think that the Fed will resume its tightening cycle sooner rather than later.

But the report also notes that the investment opportunities index fell to its lowest level since the final quarter of 2012, possibly indicating that uncertainty over the outcome of November’s presidential election is causing companies to put big plans on hold.

With protectionist sentiments on the rise across many nations, Tuesday?s US presidential election could have a significant impact on whether this improving confidence translates into genuine increases in employment and investment. Inevitably, the Caribbean will be affected by the presidential election despite not being at the forefront of the election campaigns.

Meanwhile across the Atlantic, fears that headwinds from the UK vote to leave the EU in June could spread to the global economy have not been realised, with confidence among UK businesses holding up relative to the previous quarter – although it is still low, with respondents reporting a decrease in confidence outnumbering those reporting an increase.

UK confidence plays a huge role in Caribbean tourism too. The Caribbean Tourism Organisation (CTO) recorded a 10% increase in UK arrivals in 2015 to more than 1.2 million, against a 6.4% overall growth in visitors and a 3.9% increase to just over five million from Europe as a whole.

UK visitor numbers were the highest since 2008, and the highest in seven years to the two most popular destinations from Britain, Barbados and Jamaica.

CTO figures show Barbados received the largest share of UK visitors last year with 214,000 or almost 18% of the total, followed by Jamaica on 199,000 (16%), Cuba on 156,000 (13%) and the Dominican Republic on 142,000 (12%). The Turks and Caicos Islands saw the biggest increase of 49% to almost 6,400.

But a strong performing US can affect the number of UK visitors. A strong dollar, in particular, will make accommodation relatively more expensive in some areas of the Caribbean for instances.

Despite improvements in confidence globally, the world is yet to see it translate into a meaningful boost to hiring and investment. The report shows that only 19% of firms are considering hiring new staff, and only 14% were looking at opportunities to invest in new technology. In every region, there were more businesses planning to cut staff than those planning to hire more.

This is not the time for businesses to lose sight of the expertise finance professional can provide. As the Caribbean works towards steady economic growth and improving lives across the region, it is finance professionals who are at the forefront driving this future.

Finance professionals are more vital than ever to the success of firms. After all, they are the backbone of the business and responsible for steering businesses through the good and bad times. Through contributing to discussions about economic growth, managing finances and promoting good financial management, they enable businesses to confidently face the times ahead and take advantage of challenging circumstances. These are huge responsibilities and having the right people in an organisation is vital to their success.