NOT EVEN AN “encouraging” tourism performance was enough to boost growth of the Barbados economy up to the end of last month.
And following this marginal 0.3 per cent growth in the first three quarters of the year, the Central Bank is cautioning that its projected 0.5 per cent for the rest of 2015 hinges on the success of Government’s medium-term programme for growth and fiscal adjustment”.
Commenting on the economy’s performance, in a third quarter review issued this afternoon, Governor Dr DeLisle Worrell said tourist arrivals increased by 14.5 per cent up to the end of last month.
However, he said its impact on the economy was dampened because “construction activity fell short of expectations, and the spill over effects to the retail and domestic services sectors were muted”.
As for future prospects, the economist said the bank’s 0.5 per cent growth project for this year was mainly due to the delayed implementation of a number of “major private and government-funded investment projects”.
“Assuming that these projects will now be underway next year, growth rises to about one percent in 2016 and two percent thereafter. It is possible to improve significantly on these forecasts,” he said.
“Factors that can make for much better performance include the improvement of administrative efficiency in the public service, initiatives to increase labour productivity and worker engagement, an aggressive policy of fiscal consolidation, more effective incentives and support for green energy and new and more appropriate financing of the development of the cultural and heritage sectors.”
Worrell also pointed to “a widening gap has opened up between labour costs and productivity in Barbados”, and said “a medium term strategy for closing this gap has to be placed high on the agenda for action by the Social Partnership”.
In terms of the fiscal deficit, Worrell said during the first half of government’s fiscal year – April to September – it was $19 million less than for the same period last year, with a $99 million increase in property taxes boosting overall revenue by $50 million.
Average unemployment over the first half of the year was 12 per cent, inflation fell to 0.8 per cent in the 12 months ending on July 31, and the usage of foreign reserves has reverted to normal, Worrell added.
“At the end of September, the international reserves stood at $976 million, providing cover equivalent to about 14 weeks of imports of goods and services,” he said. (SC)
