Worrell: Hold on
THE BARBADOS ECONOMY is still in the doldrums, producing no growth again, even in the first quarter when the highlight was the key winter tourist season.
But after five years of negative economic news culminating with the firing of 3 500 public workers, Governor of the Central Bank Dr DeLisle Worrell’s advice is to hold on – growth will be coming next year.
The island’s chief economist reported: “The economy is not expected to grow significantly this year, but a gradual, sustainable recovery, driven by the foreign exchange sectors, is expected in 2015 and 2016.
“Forecast growth rates are less than 0.5 per cent this year, two per cent next year and 2.5 per cent in 2016.
“A major growth factor is expected to be investment in tourism and infrastructure and other financial inflows totalling $4.5 billion over the next three years.”
In his widely anticipated quarterly report, Worrell said the first quarter of 2014 amounted to another three months of negative economic activity.
The economy contracted by 0.4 per cent, the bank said, though he explained that the performance was better than the same quarter last year when the economy contracted by 1.2 per cent.
Average unemployment for 2013 was 11.7 per cent compared with 11.6 in 2012.
Worrell said inflation fell to 1.7 per cent for the 12 months ending in February, well below the 6.3 per cent averaged in the corresponding periods since 2008.
The vital foreign reserves remained almost unchanged, ending at $1.1 billion at the end of April, representing 16 weeks of import cover.
Despite anecdotal evidence that suggested the economy would have enjoyed a bump from this year’s winter tourist season, the numbers from the Central Bank told another story.
The Central Bank head pointed out: “Long-stay arrivals are estimated to have decreased by one per cent in the first quarter. The number of United Kingdom visitors grew by eight per cent, buoyed by the introduction of a new chartered service from Manchester and strengthening of the pound sterling.
“Arrivals from other European countries rose by 14 per cent. However, with the cancellation of American Airlines direct flights from New York, as well as the reduction in demand and seating capacity by Air Canada at the beginning of the year, visitors from the United States and Canadian markets fell by eight per cent and ten per cent, respectively.”
The bank also revealed that there was a one per cent fall in cruise passenger arrivals.
While there was a substantial decline in rum exports in the first two months of the year, with bottled rum falling by 31 per cent, the bank said Barbadians were taking to solar power generation with generating capacity doubling between 2012 and the end of 2013.
On developments in the economy, Worrell disclosed: “The deficit in the fiscal year just ended was larger than expected at 11.3 per cent, mainly because of a $245 million fall in revenue. Corporation tax was down by $80 million, VAT by $65 million and personal taxes by $15 million.
“The main item of expenditure increase was interest costs, which was up $47 million. Transfers to public institutions were at the same level as in the previous fiscal year.”