The Barbados economy continued its modest recovery with 9.8 per cent growth throughout the July to September quarter, bringing the expansion for the primary nine months of this 12 months to an estimated 10.1 per cent, in accordance with the newest Central Bank report.
Delivering his economic review for the primary nine months of this 12 months, Central Bank Governor Cleviston Haynes said on Wednesday that growth continued to be led by tourism activity “and its spillover into the non-traded sectors and the manufacturing sector”.
He’s maintaining a forecast for double-digit growth of 10 per cent for this 12 months and continued growth for 2023 as a result of a predicted further upturn in global tourism and the implementation of enormous private and public sector construction projects.
Tourism arrivals at the top of September reached 302 863, around 58 per cent of 2019 levels. This in comparison with 239 639 visitors for the primary nine months of last 12 months.
Haynes noted that with the relief of world COVID-19 containment protocols, tourist arrivals have been steadily rising, reflecting the worldwide demand for travel.
“The rise in airlift, though still not at 2019 levels, allowed Barbados to learn from the rising demand for international travel,” he said.
Nevertheless, the slower rate of recovery throughout the summer months was compounded by the cruise industry reallocating vessels to other regions, explained the Central Bank Governor.
“This dampened the recovery of the attractions sub-sector, a few of whose members depend heavily on cruise activity,” he acknowledged.
Lower visitor arrivals throughout the summer period led to a fall-off in occupancy levels from the primary half of the 12 months, while the typical revenue per available room for the primary nine months of the 12 months greater than tripled from a 12 months prior. It was just 10 per cent lower than in 2019.
The sharing economy also continued its recovery, with occupancy levels averaging 59 per cent for the primary nine months of this 12 months, and was 9.5 per cent lower than the identical period in 2019.
The tourism sector contributed an estimated $508.2 million to economic activity for the primary nine months of 2022.
Despite the rebounding tourism sector and modest growth, Haynes warned that “significant downside risks to the economic recovery remain, largely revolving across the difficult external economic environment that has impacted the provision and the worth of international commodities”.
The quarter under review saw slower inflation in Barbados when put next to the identical period last 12 months, which the Central Bank attributed to the beginning of a decline in food and energy prices internationally with the re-entry of Ukrainian food supplies into the worldwide commodities market and the worth relief initiatives of the Barbados Government and the local private sector.
He reported that the relief measures, which took effect towards the top of July, have began to ease inflationary pressures, evidenced within the reduction of the costs of bread and cereals, meat, milk, cheese, eggs and private care items.
Nevertheless, Haynes warned that “prices still remain elevated when put next to August last 12 months”.
The inflation rate as of the top of August was 7.8 per cent, down from 11.5 per cent at the top of June.
The Central Bank Governor said: “This reduction in price pressure should aid the continuing recovery. Nevertheless, oil producer efforts to drive up prices and expected supply challenges for fuel in Europe throughout the winter period now threaten to undermine the gains.”
Reporting on the Government’s economic performance, Haynes pointed to falling debt levels, an improvement in revenue, and a decline in expenditure for the primary six months of the fiscal 12 months.
Nevertheless, he pointed to the necessity for continued public sector reform to enhance the standard of service while reducing the burden on public funds, to release resources for needed infrastructure development and climate resilience constructing. He said continued public sector reform also needs to result in improved productivity and competitiveness of the general public service.
Total revenue rose by $254 million, on the strength of broad-based increases in tax revenues, to achieve $1.561 billion between April and September.
Meanwhile, current expenditure reached $1.377 billion throughout the same period. Non-interest expenditure declined by $78 million given one-off capital spending occurring throughout the previous fiscal 12 months, including the recapitalisation of the National Insurance Scheme ($50 million) and the purchasing of roll-out carts under the Sanitation Service Authority ($18 million).
“Grants to public institutions also registered a $27 million decline given a shift within the timing of transfers to some state-owned entities, while grants to individuals contracted by $7 million throughout the period,” said the Central Bank report.
“Goods and services rose by $47 million as spending on property maintenance, general operating expenses and utilities increased over the period. Wages and salaries remained broadly consistent with the previous fiscal 12 months while spending on interest payments increased because the step-up rate of interest feature on domestic bonds commenced,” it added.
The excess generated over the primary half of the fiscal 12 months eased Government’s borrowing needs and assisted with the repayment of debt service obligations.
At the top of September, the general public debt stock stood at $13.8 billion or 126.6 per cent of Gross Domestic Product. Gross international reserves totalled $2.806 billion, corresponding to 30 weeks of imports of products and services.
Haynes noted that labour market conditions also continued to enhance during this 12 months, with jobless claims “reverting to a standard trend”.
At the top of June unemployment was recorded at an estimated 9.3 per cent, down from 15.9 per cent a 12 months earlier.
The three foremost industries accounting for improvements within the unemployment rate were tourism, wholesale and retail trade, and construction.