Rising fuel costs threaten Caribbean economy

Caribbean leaders are bracing for a tourism slump and say that a protracted crisis in the Persian Gulf could throw the region into a deep recession.

Growth in island tourism peaked in 1987. Since then, the growth rate has declined as the economy of the Northeastern United States, its most important market, slowed and entered what some experts consider a recession.


Now the islands face other daunting challenges to their most important industry: rising air fares, which they fear will discourage vacationers, higher fuel bills and shipping costs on imported goods used by hotels and restaurants.

"With air-fare increases, our economies will certainly be affected," said John St. Luce, finance minister of Antigua and Barbuda. "We are fragile in the economic, political and social sense."


"It's going to squeeze everyone's discretionary spending," said John Bell, executive vice president of the Caribbean Hotel Association.

"If the problem is solved in the next couple of weeks, the impact wouldn't be that serious but if it stretches on, then God knows, it could be quite serious."

While higher oil prices are expected to hurt international travel overall, the Caribbean faces problems that many other tourist areas don't. In addition to fuel, most of the islands must import hotel and restaurant staples like chicken, shrimp, soap and towels.

Shipping costs are headed up, too.

Tropical Shipping, which serves the region from Miami, recently added a surcharge to cover higher fuel costs. Tropical is charging $35 more on 20-foot containers and $70 on 45-foot containers.

But, overall tourism officials say, the most critical factor will be the impact that the oil crisis has on the economy of the United States, which accounted for more than half of the non-cruise tourists that traveled to the Caribbean last year.

"Although there has been much talk of the U.S. economy slowing down, things always turned out better than we expected," said Arley Sobers, research director for the Caribbean Tourism Organization.

"This could be the straw that breaks the camel's back."