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I HAVE ARGUED from time to time that the effective management of any economy – large or small – is a rather difficult task because of the complexities associated with economic relationships and the sometimes rapid changes that usually take place within our domestic, regional and international space.
For example, if the United States decides to “blacklist” some Caribbean countries because of certain weaknesses in say, their offshore legislation, that simple move could have disastrous implications for those countries that depend so heavily on international business to drive their economies.
Clearly, these fallouts magnify when the countries have very limited resources, are small in every aspect (population, physical dimension, the economy) and hence are limited by the policy options available for economic transformation.
This narrative suggests, therefore, the need for small countries like those in the Caribbean to monitor very closely their course of economic development and be willing and able to make economic adjustments when deemed necessary.
If, for some reason, the Government of the day is determined to bury its head in the sand like the proverbial ostrich, then, the outcome in terms of sustained economic performance will be quite predictable.
In short, governments have to take responsibility for what is happening in the economy, especially when economic outcomes are a large reflection of the policies and programmes implemented by governments. If the economy is performing according to expectations, then, the existing policies and programmes can be maintained and strengthened. If, however, the economy is performing worse than anticipated, then, remedial action is mandatory.
Some critics may be quick to point out that that suggestion can be categorised as something which is easier said than done, but the reality is that there are ample cases to the contrary.
For example, in responding to the immediate fallout from the 2008/2009 global financial and economic crisis, many countries in Europe, including England, implemented austerity programmes to stabilise their economies and hopefully restore economic progress within a very short period of time.
Having recognised the failure of that strategy, the British government reversed its policy stance, turning instead to a stimulus package which eventually turned that country’s economy around. In short, economic adjustment worked!
Recently, the Governor of the Central Bank of Barbados presented his usual report on the performance of the local economy in the first quarter of 2015. Based on the said report, the economy grew by less than 1 per cent in the first quarter on the strength of the performance of the tourism industry.
For the remainder of the year, the economy is expected to grow by 1.5 per cent to two per cent, again on account of continued good performance of tourism and about $700 million in private sector investment.
Given the massive changes in Government’s policies and strategies over the past several months – all designed to stabilise the fiscal situation and grow the economy – the evidence contained in the recent Central Bank’s report confirm that those policies and strategies are not having their desired effects.
Hence, should the Government continue along its current path or should it make radical changes to its economic strategies? I think the answer to this important question should be clear to all and sundry. Therefore, let’s wait and see what economic adjustments are apparent in the next budgetary presentation! Email: email@example.com