Marla Dukharan, Economist and Leading Advisor on the Caribbean, spoke about the “colossal policy failure” that had led the world’s economies through a rollercoaster ride ending with governments slamming the breaks on massive economic stimulus, resulting in breakneck tightening as they desperately try to get supply-driven inflation under control.

Layering on the collapse of banks such as Silicon Valley Bank and “we are in a really volatile ride,” Marla said.

But the uncertainty faced today was driven less by geopolitical factors as it was a year ago and more so by policy failures, about which no one was sure what to do.

The World Economic Forum’s Global Risk Report listed the top ten risks for the next two years, including: a lack of meaningful adaptation to climate crisis (half of the top ten risks); a cost-of-living crisis; geo economic confrontation; social instability; widespread cybercrime; and large-scale involuntary migration.

Cayman, as “the best run country in the Caribbean”, took just three years to recover from the last financial crisis, tourism-wise, but was slower this time around due to the slower reopening of the island post-pandemic. That said, while most Caribbean economies were hoping to return to pre- Covid levels next year, Cayman achieved this last year, Marla explained.

Cayman expected to see less growth volatility than other Caribbean countries and robust positive growth, with growth for first quarter of this year at 3.8%, year over year.

However, Marla warned that growth could not be more important than the people creating it. Growth needed to be viewed within the context of who would benefit and who would suffer. The financial services industry was crucial to Cayman’s economy, contributing around 40% to GDP, employing around 16.4% of the total labour force. The sector was a major employer of Caymanian women, employing about 30% of the Caymanian female workforce.

“If this sector would cease to exist, the government would be facing a huge fiscal deficit which means this sector is in effect subsidising public services that the entire economy relies on,” she advised.

Blacklisting ate up a lot of oxygen for policymakers, she advised, so fiscal buffers needed to be built to mitigate shocks to this sector.

At the same time, Cayman was not adequately measuring the net f/x contribution and net fiscal contribution of the tourism sector to the economy.

“We really need to have this data…that is a problem because our policy makers subsidised and emphasise this sector as though it the goose that lays the golden egg but we don’t have the data to support that notion and we could be prioritising a sector and increasing our dependency on a sector that we are not sure it is adding the value we need.”

Policy also needed to address inequality within the community

“We have to remember what the risks of income inequality are and we have to use policy to mitigate these risks, particularly as it relates to inflation, home ownership, wealth inequality and the resulting level of poverty. Otherwise, what we are doing, we are importing poverty and exporting our progress.”

Cayman needed a national vision to focus on what really matters most to the people, Marla said.