Governor projects contraction in economy
The Barbados economy is likely to contract by half a percentage point of Gross Domestic Product (GDP) this year even as it remained stable through the first nine months of 2010, Governor of the Central Bank Dr. Delisle Worrell said today.
He told reporters that unfortunately, the recovery in the international economy is driven mainly by the performances of emerging market countries such as China, India and Brazil, and growth in the countries where Barbados sells its tourism and international business and financial services remains weak and uncertain.
“Therefore, even though Barbados enjoys a strong competitive position in both these markets, it is advisable to be cautious going forward, and to conserve foreign exchange reserves by maintaining a tight regime of fiscal consolidation. This will keep the economy stable and reassure investors at home and abroad, so that private capital inflows and private investment continue to contribute to the quality and diversity of the foreign exchange earning sectors,” he said.
He said that Barbados is likely to see a “contraction in the region of half of a percentage point of GDP for 2010 as a whole, with the onset of the winter tourist season in December, and with a modest pickup in tourism-related construction in the fourth quarter.
“The construction sector is expected to see some improvement during the latter part of the year, as foreign financing for some major projects is scheduled to come in by year-end. It is anticipated that foreign exchange inflows for the remainder of the year will be sufficient to fund most imports, and foreign exchange reserve cover is expected to end the year close to the current level.”
Worrell said that the David Thompson government would continue to focus on support for tourism competitiveness and market diversification, as well as continued fiscal consolidation in order to attain the objectives of the Medium-Term Fiscal Strategy (MTFS).
The Central Bank Governor said that the local economy remained stable through the third quarter, even though the global outlook remained very uncertain.