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THE INTERNATIONAL MONETARY Fund (IMF) appears to have a slightly more optimistic view about Barbados’ economic growth prospects than the Central Bank.
But the IMF cautioned that the island was “vulnerable to Brexit-related risks” and its recovery was still dependent on tourism and continuing low commodity prices, especially oil.
Last week, Central Bank Governor Dr DeLisle Worrell, in the bank’s review for the first nine months said the economy was projected to grow by 1.4 per cent this year. This was a downward revision of previous growth projections of 1.6 per cent and 1.5 per cent.
In its new economic outlook for the Western Hemisphere, however, the IMF predicted the economy would grow by 1.7 per cent this year and next year.
The projection for Barbados is one of the lowest for the Caribbean this year. Those forecast to perform worse in terms of expansion of gross domestic product were Trinidad and Tobago (-2.7 per cent)The Bahamas (0.3 per cent), Dominica (1.5 per cent), Haiti (1.5 per cent), Jamaica (1.5 per cent), and St Lucia (1.5 per cent).
The IMF said: “The region’s outlook depends broadly on recovering tourism and trends in commodity prices, but there is substantial variation across countries.
“GDP growth in the tourism-dependent economies [including Barbados] is projected to increase from 0.8 per cent in 2015 to 1.4 per cent in 2016, but with substantial variation across these economies.”
It added: “The tourism and business-process outsourcing sectors are also supporting growth.
“The Bahamas continues to gradually recover from two years of negative growth.
Most tourism dependent economies have benefited from a recovery in tourist arrivals, though growth is expected to moderate this year, and Barbados has already experienced a significant slowdown relative to the large expansion in 2015.
“The slowdown in the United States has contributed to this moderation in tourist arrivals in some countries, but the elasticity of the response is relatively small.”
Another bit of good news for Barbados was the fact that “inflation has been muted . . . , as low international oil prices continue to stifle inflation pressures”.
Overall, the IMF said the outlook for economic activity in Latin America and the Caribbean “is broadly unchanged relative to six months ago, with subdued prospects over the medium-term”.
“The region’s growth performance has, on average, fallen behind the rate of increase in global activity since 2013 – with cumulative GDP growth of 0 per cent in Latin America and the Caribbean in contrast to 11 per cent in the rest of the world – although there is significant variation within the region.” (SC)