Despite quite a lot of uncertainties that proceed to threaten the economic prospects for Barbados this yr, the island recorded economic growth of 11.8 per cent for the primary three months and is heading in the right direction to finish the yr with double digit-growth, in response to the most recent Central Bank report.
Nevertheless, said Central Bank Governor Cleviston Haynes, this continued strong economic expansion would require several urgent measures to mitigate the risks.
“I feel the 11.8 per cent growth is in keeping with our forecast. Our tourism arrivals were nearly exactly as we had forecasted they might be. So we’re comforted by that fact,” said an optimistic Haynes.
“It is absolutely the uncertainty that prevails at this point, that’s our concern. We’ve got done loads to attempt to bring the economy back – we have now more people back to work . . . Due to this fact there may be a possible for increased economic activity but there may be uncertainty about really what’s going to occur given what is going on globally,” he cautioned.
Delivering his first quarterly review of the economy for 2022, Haynes noted that a re-emerging tourism sector helped to propel the expansion momentum and stabilise the labour marketplace for the January to March 2022 period.
Nevertheless, Haynes noted that to ensure that Barbados to cut back its economic vulnerability there should be improvement in food and energy security, strengthening of resilience to climatic events over the medium-term and enhancement within the island’s competitiveness.
He also noted that there was a necessity for continued investment in renewable energy to assist address the negative effects of volatile oil prices and to enhance competitiveness.
“Accelerating implementation is now crucial profiting from the liquidity within the banking system. As well as, we must bolster our competitiveness by lowering the associated fee of doing business, increasing our output and improving our turnaround times,” he added.
“The trail towards sustained growth requires a robust partnership with all stakeholders, a commitment to innovate and improve performance by everyone. Each private and non-private sectors, including small and medium-sized enterprises, will need the support of cash and capital markets to support this innovation. This path is kind of attainable if we proceed to tug together within the country’s interest,” he said.
But with uncertainties regarding the continued COVID-19 pandemic, supply chain disruptions and the war in Ukraine, Haynes said Barbados’ bread and butter tourism industry might be significantly impacted, leading to lower than ideal economic performance.
“It could work either way. It might be that individuals determine they aren’t going other places and they’re going to search for warm destinations corresponding to within the Caribbean and we may benefit in that context. But there may be also the danger that individuals determine to remain closer to home due to the uncertainty and due to this fact not travel,” he explained.
Indicating that forward bookings were “relatively encouraging”, the Governor added, “As you may appreciate, individuals also can cancel in the event that they see a change in the general global outlook. So that basically is our primary concern at once – what is going on internationally and the way would that impact on what we do here. Due to this fact, while we’re still optimistic that we are going to have the ability to realize our double-digit increase for 2022, we’re also mindful that there are significant downside risks related to that forecast.”
The 11.8 per cent growth in economic activity throughout the first three months was led by the tourism sector as pent-up travel demands translated into the very best level of long-stay arrivals for the reason that onset of the pandemic.
This was led by arrivals from the UK, and particularly an influx from that source marketplace for the successful hosting of the England/West Indies cricket series and improved airlift from key source markets as countries contained incidence of severe COVID-19 infections and relaxed travel-related health protocols.
“Regardless of the strong performance, long-stay arrivals were akin to just 55 per cent of 2019’s record level (208,774 total arrivals) as demand from the US, Canadian and Caribbean markets recovered more slowly,” he said.
Cruise activities also registered moderate recovery, with just over 94,000 cruise passengers arrivals recorded throughout the first three months of 2022.
The agriculture sector continued to be challenged throughout the review period, due mainly to rising commodity prices for key inputs including feeds and fertilisers, but preliminary data suggested that overall agriculture production increased by almost three per cent.
Manufacturing output rose by 5.4 per cent in the primary quarter, reflecting a rise in domestic demand and the partial recovery of exports, while non-traded sector activity increased by 3.5 per cent throughout the quarter on account of more construction activity and gains in wholesale and retail and business and other services.
In the course of the period under review, the moving rate of inflation is estimated to have risen 4.2 per cent, the international reserves declined barely by $40 million to succeed in $3.02 billion, while Government’s revenue and expenditure each increased.
“Revenues for the quarter recovered in keeping with the economic recovery and were almost at the identical level as in 2020. Nevertheless, non-interest expenditure, though lower than in 2021, remained elevated. In consequence, preliminary data indicates that Government achieved a primary deficit of $92 million (0.9 per cent of GDP) for the fiscal yr,” said Haynes.
“This performance was on par with the previous fiscal yr. At the identical time, domestic interest payments rose by $68 million and contributed to an overall fiscal deficit akin to almost five per cent of GDP,” he said.