Posted on

Recovery slipping back

Sanka Price

Recovery slipping back

Social Share

THE BARBADOS ECONOMY continues to falter, according to the latest analysis by the Central Bank of Barbados.
And it has been forecast that “prospects of a full recovery from the economic recession have become more distant because of the weakened growth prospects for the United States, [Britain] and other advanced economies”.
In its Review Of The Barbados Economy For The First Nine Months Of 2011 released yesterday, the bank revealed that earnings from Barbados’ two leading foreign exchange sectors – tourism and the international business and financial services – had both declined. And real output for the first nine months was one per cent, only half the rate of growth projected at the start of the year.
There were also contractions in manufacturing (two per cent), sugar production (eight per cent) and non-sugar agricultural output (four per cent).
The review further stated that prices for fuel rose during the period, as well as major commodity and retail prices.
“Sluggish economic growth and the prolonged period of weak cash flows have made it increasingly difficult for private sector employers to maintain staff levels, and there has been some increase in the unemployment rate.
“There were about 700 new claims for unemployment benefits between March and September, suggesting that the rate of unemployment was around 11 per cent for end-September,” said the report.
It continued: “The average of retail prices for the 12 months ending in July was about seven per cent higher than in the previous 12 months. This represents an acceleration in the rate of inflation, which stood at 5.8 per cent at December 2010.
“The prices of food items, which account for 34 per cent of average household consumption, rose 2.8 per cent over the 12 months to September, and fuel and light prices were up around one per cent,” said the report.
The review noted too that the banks were lending only marginally more on what they did in 2009, while savings were flat over the same period.
A glimmer of hope comes, though, through international reserves offering “an adequate cushion to protect the value of the Barbados dollar, and to accommodate expected fluctuations in the demand and supply of foreign exchange on the interbank market”.
Also the provisional data for the period April to September (the first six months of the current fiscal year) show the fiscal deficit down from 9.6 per cent of GDP last year to 5.3 per cent.
“Approximately two thirds of the improvement in the deficit was due to higher revenue, mainly VAT ($68 million), excise taxes ($20 million) and corporate taxes ($9 million). On the expenditure side, notable reductions were made in the outlays for wages and salaries ($11 million), transfers to households ($13 million) and subsidies to Government-owned or supported corporations ($32 million).”
The bank concluded that given the global economic challenges, growth in the Barbados economy this year was now projected to be not much better than one per cent.