Barbados not alone in challenges
A Caribbean economic report released ahead of last week’s debate on the 2014/2015 Estimates of Revenue and Expenditure highlighted the fiscal challenges confronting Barbados, but said the island was not alone in facing such hurdles
In a document authored by RBC Caribbean group economist, Marla Dukharan, it was also suggested that the recent “polar vortex” in the United States might have had some negative implications for the region.
Dukharan referred to Barbados’ fiscal consolidation efforts, noting they were “in full swing”, but also pointed to challenges related to tourism and other matters.
“According to the CTO, stopover arrivals declined by 5.5 per cent in November 2013 year on year, which is the steepest drop seen across all regional countries reviewed,” the RBC Caribbean report said.
“The IMF’s recently released reports outlined the following: the Government has laid off about 1 800 employees and another 1 200 will take effect by the end of March 2014; the level of gross central government plus non-financial public sector debt (including debt held by the NIS) crossed 140 per cent of GDP in September 2013; the fiscal deficit should narrow from 9.6 per cent in financial year 2013/14 to five per cent in financial year 2014/15, provided the fiscal consolidation is fully executed on time,” it added.
To further illustrate the challenges, Dukharan referred to the Caribbean Development Bank’s (CDB) recent regional economic review and forecast.
While saying the Barbados-based CDB’s statements suggested it was “optimistic about 2014”, she noted the news was likely to be more positive for commodity exporters including Guyana and Suriname.
“None of the service-based economies saw growth over three per cent, and Anguilla and Barbados experienced their sixth consecutive year of ‘economic stagnation’,” the economist said.
The February 2014 report analysed the impact of the recent harsh winter weather in the US, saying it contributed to market jitters there.
It said that given that US consumer confidence declined to 78.1 in February 2014, down from 79.4 in January, it could be argued that the polar vortex might have had a role to play, alongside uncertainty about the US debt ceiling and relatively weak job creation. RBC economists expect that the unusually adverse weather will slow real growth in consumer spending to 2.3 per cent annualised in Q1 2014, down from 3.3 per cent in [the second quarter of] 2013,” Dukharan observed.