Waiting for the Next Big One
Last year's hurricanes spotlighted the Caribbean's vulnerability. How will this year treat the region?
Hurricanes are no trivial matter. They killed scores of people and left billions of dollars in damage last year. Tiny Grenada alone saw 40 deaths, $1 billion in damage and a sickening collapse in growth from initial forecasts of 4% in 2004 to a revised projection of -3%. Grenada later defaulted on $100 million in 10-year Eurobonds it had issued in 2002, and the IMF does not expect the island's economy to recover fully until 2007.
Hurricanes hurt large countries, too. Jamaica, the Caribbean's largest English-speaking country, seemed to be pulling itself together until the arrival of Hurricane Ivan in September 2004. Growth, inflation, external payments performance, the budget and other key indicators were all pointing the right way. But Ivan put a dent in growth forecasts and hit the island's already overstretched public finances. Although the economy is recovering, Standard & Poor's cut Jamaica's credit rating to B...
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