The Central Bank governor’s first panel discussion failed miserably as a replacement for his usual Press conference with the entire media.
His choice of moderator proved to be an error as he was obviously surprised by the nature of the probing.
In addition, the accountants on the panel did not compromise on their knowledge of financing principles.
In short, the discussion confirmed the country’s economic problems and questioned the current path of the policymakers.
The panel discussion format was chosen for reasons that have not been made public. However, given the circumstances that led to it as an option after four decades, it may be argued that one of the reasons was to get around dealing with specifics of the economic issues in a particular quarter and focusing on generalities. In this vein, the new format opened a new can of worms.
For example, Dr DeLisle Worrell sought to evade moderator David Ellis’ concerns about the paltry cumulative decline in the Barbados economy of three per cent since 2008 when compared to evidence of a far more significant decline estimated by the Barbados Statistical Services (BSS).
Typically at the usual Press conference, the focus on economic growth would have been for the first half of the year, but the governor attempted to mask the below par performance for the year so far in what happened over the last six years.
This attempt at masking created an open field for the moderator to play with the information that he had and he was able to quote real gross domestic product (GDP) estimates from as early as 2008 and onwards.
The differences in the real GDP numbers of the Central Bank of Barbados (CBB) and the BSS were treated to by suggesting that “they are all estimates”.
Most of the important economic data – unemployment, GDP, cost of living – are determined from surveys that yield estimates in which the experts have confidence. The differences would have to be the result of the statistical methods used, not simply that they are all estimates.
As far back as 2010, concerns were raised about the real GDP data that was being presented to the public because for the first time in the economic history of Barbados, the nominal GDP declined but real GDP increased. For this unusual event to occur, prices would have had to fall in the Barbados economy.
Therefore the concerns raised by Mr Ellis had to be addressed in the context of the history behind how nominal and real GDP were estimated by two different institutions over the years. The BSS is responsible for compiling nominal GDP, while the CBB had responsibility for real GDP. The former is by law while the latter was by convention.
The unusual event mentioned above would have raised the eyebrows of trained minds. Since the establishment of the CBB in 1972, nominal GDP declined in the following years, 1991, 1992 and 2001 and in each year real GDP also declined.
However, in 2010 and 2012, nominal GDP declined and real GDP increased marginally in the first case and there was “zero growth” in the second case. Given the almost ten per cent inflation rate in 2011, the almost one per cent growth in real GDP was also being questioned by the trained minds.
In essence, the unexpected relationship between nominal and real GDP in recent years triggered concerns among economists and statisticians.
As a consequence, it has apparently been finally agreed that the BSS would be responsible for the calculation of both types of GDP in the Barbados economy.
Mr Ellis would have definitely surprised the governor when he revealed the real GDP estimates done by the BSS and received the surprising response that “they are all estimates”.
From a policy perspective, the disparity in the numbers speaks to a bigger concern: the quality of the prescription to rescue the Barbados economy if the diagnosis was done on real GDP estimates that were way off target.
Now that these new estimates are available, some of us who thought that the economic recession was deeper than was being suggested were not wrong. Furthermore, the deeper recession does not support the notion that the economic decline was all externally driven.
The observations made by some analysts over the years were and are not personal attacks on anyone or any institution. They were simply given by professional economists whose main interest is to give of their best to the country that made them.
No man is an island and the time has come for some to accept that the economic problems have been misdiagnosed.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy.
