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Decline in U. S. Dollar Disrupts Caribbean Economy

NNPA, News Report, Crystal Cranmore Posted: Jun 06, 2008

WASHINGTON(NNPA) - The decline in the U.S. dollar is having a ripple affect on the Caribbean causing islands to suffer a loss in remittances, the money sent home by Caribbean immigrants working in the United States.

The U.S. dollar dominates everything which causes a rippling effect. In comparison to the US, prices have gone up and the cost of living is high. The money that we receive from family [in the U.S.] helps, but with prices sky rocketing it is quickly used up, says Trinidadian Joycelyn Wilshire, recently visiting family in New York.

She says that prices have increased up to 120 percent.

In places like Trinidad and Guyana, the standard of living has increased so much that people are encouraged to grow food in their back yards to help each other out.

The current state of the U.S. economy is strenuous to most of its citizens, especially those who work extra hours just to send enough money back to loved ones abroad. Last year, U.S. immigrant workers sent $42 billion dollars abroad, the most from any country, according to the BBC.

Jamaica is the largest recipient of remittances in the English-speaking Caribbean. The BBC reported that up until November 2007, Jamaica received up to $1.8 billion dollars based on money from the U.S., which does not include unofficial money that is sent through family and friends instead of by money order.

Remittances are a very importance source of revenue for families in Jamaica and the depreciation in the dollar can mean depreciation in remittances.

Jamaica is not feeling the impact of the decline in the U.S. economy as much as the rest of the Caribbean according to Andrew Knight, a graduate of the Howard School of Business and a native of Jamaica.

Since Jamaica gets so much of its cash flow from funds coming from the United States, Jamaica doesnt feel the impact as hard, he said. Nonetheless, the cost of everything is still going up. At the end of the day, if the value of the dollar in the states goes down, so will the value of the remittances.

According to Kenrick Hunte, a professor of economics at Howard University, it is not safe to determine the impact of a possible recession in the United States on Jamaica at the moment.

He said, Even though Jamaica receives the largest amount of remittances from around the world, Guyana is the largest receiver of remittances per capita since it has a much smaller population. But, it cannot be determined if the decline in the dollar is going to have an impact on either of these countries without sufficient data.

In islands like Trinidad, much of the revenue comes from oil. If the price of oil in the United States drops because of the recession and economic hard times, Trinidad will feel the impact. Wilshire said that the cost of transportation has generally increased, but if the price of oil decreases, the amount of money that it will take to operate various businesses will increase, potentially causing the unemployment rate to climb. A situation that is currently apparent in the U.S.

The Labor Department said that 378,000 people filed for claims, much higher than what was expected. According to CNN, economists had expected to see initial job claims rise by 4,000 to 360,000, but unemployment claims have continued to surge, making it the highest level since Hurricane Katrina.

Unemployment benefit applications increased by 38,000 in the span of one week at the end of March. This level of jobless claims, which will undergo more review, is one indicator that the U.S. is in a slight recession or that the country is experiencing negative economic growth.

In addition to remittances, some islands often rely on tourism for a source of income. A downturn in the US economy will ultimately affect tourism in the Caribbean. With prices going up, less people are focusing on traveling to the islands and concentrating more on necessities.

Cherill Lewis, a native of Guyana, would love to go back home but with a series of bills to pay and increasing prices, she finds it hard to do so. Its been years since I went back, but now that I want to go, I cant because I do not have the extra funds.

Lewis has been living in New Jersey for 19 years but moved to Brooklyn from Guyana in 1985. Since then, part of her income has always gone back home to help her younger sisters.

Said Lewis, I suggest that the Caribbean starts depending less on the U.S. for income and maybe that will help to alleviate any possible strains the economy may have.

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