(CNS): When legislators meet in parliament next week, among the 21 parliamentary questions that members of the opposition intend to put to the government, Opposition Leader Roy McTaggart will be asking Finance Minister Chris Saunders what the chances are that the Cayman Islands will face a recession next year. McTaggart wants to know the “government’s assessment regarding the likelihood of the Cayman Islands entering a recession in 2023”. According to the World Bank, the interest rate hikes in response to inflation indicate that the world may be edging toward a recession.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” World Bank Group President David Malpass said recently.

Here in Cayman, inflation is still soaring and interest rates have been climbing in line with increases in the United States. But after four consecutive “jumbo” rate hikes of 0.75%, Federal Reserve Chair Jerome Powell has suggested that the next rate hike in December may only be half a point. In a speech at the Brookings Institution in Washington DC on Wednesday, he said that while inflation is still far too high, the Fed would moderate the pace of rate increases in the hope of avoiding a recession.

But many economists feel a downturn is inevitable, given the global instability fuelled by the war in Ukraine, the continued fallout from the pandemic, supply chain problems and the increasing disruption from climate change.

The most recent figures from the Cayman Islands Economics and Statistics Office state that inflation was running at 12% in June. But with a head of cauliflower costing CI$15 in some local supermarkets, people can be forgiven for believing it could be twice that. Most residents are well aware that the cost of living here is making life extremely difficult, despite the government’s efforts to help those in need, such as subsidising residential CUC bills.

According to the Strategic Policy Statement delivered in July 2021, based on data that is now more than 18 months old, the government was forecasting that the economy would have grown this year by more than 4.7% but expecting it to slow in 2023, 2024 and 2025 by an average of 2.9%.

While public finances continued to do well during the first half of this year, reflecting the growth in the offshore sector and property sales, the government has not yet published its unaudited financial results for the nine-month period ending September. Government officials told CNS that they hope to release that report by Monday.

Indications are that the tourism recovery will likely continue keeping public finances healthy through the end of the year, but next year could be a different story. If Saunders delivers a comprehensive answer to the opposition leader’s question next week, it will reveal the government’s updated expectations for the economy in 2023.

The government is due to convene the next meeting of parliament on Wednesday at 10am.