Barbados’ competitive edge still in jeopardy
As Barbados’ economy continues to falter, the country’s international image as a business showcase in the developing world is taking a beating.
With high debt, low local savings and a yawning fiscal deficit, the country’s global competitiveness ranking has tumbled once again, going to its lowest level in years and triggering a call for an end to the economic deterioration.
The negative picture was painted by the World Economic Forum, the highly respected international body in Switzerland that carries out an annual survey of global competitiveness. In its 2014-15 assessment of conditions in 144 nations, the Forum sent Barbados’ ranking plummeting to 55th, a decline of eight places, down from 47th a year ago, making the fall one of the sharpest recorded this year. In 2012-13 Barbados was 44th and was often portrayed as a leading economically competitive place in which to do business. But in the 2014-15 report, the Forum stated noted that Barbados was finding it extremely difficult to halt the downward economic spiral, which began with the international meltdown in 2008-09.
According to the report, Barbados was “still suffering some of the consequences of the global financial crisis” that has affected rich and poor countries alike. But while some states were recovering, Barbados was not.
“As in the past this drop (in the global rankings) is driven by the persistence of the credit crunch that is regarded as the most problematic factor for doing business in the country and that is severely hindering the capacity of local businesses to finance their activities by raising new equity,” was the way the Forum put it.
Barbados was now 91st on the list of 144 countries when it came business readiness. As for the ability of its firms to get loans or venture capital to “support innovative projects,” the situation was dismal, so much so that the island was ranked 101st, putting it among the worst performing countries.
But that wasn’t all. “Concerns about macro-economic conditions persist,” a hard fact that put Barbados close to the bottom of list” because it “Barbados boasts one of the highest public deficits in the world.” As if that financial condition wasn’t bad enough the Forum’s drew attention to the high debt and other problems.
For example, it has one of the “lowest savings rates (136th) among the countries surveyed. Its public debt was so high that that it was quickly 100 per cent of the national GDP” (gross domestic product), it explained. “The need to stabilise its macro-economic outlook and ease the flow of financing toward productive investment will be crucial to allow the country to recover the ground lost since the beginning of the crisis.”
However, Barbados has some things going for it. “Barbados continues to benefit from a fairly skilled labour force thanks to a high-quality education system (15th in the world) and high enrolment rates in secondary (19th) and tertiary education” which earned it the 42nd spot on the global ranking.
In addition, its institutions were functioning well, so much so that they earned the 33rd rung on the global institutional ladder and that was true despite “some concerns about the government efficiency in managing public spending (57th), stated the Forum. It was also continuing to reap benefits from its “solid infrastructure”.
Interestingly, even in the face of its economic troubles, Barbados was the most highly ranked country in Caricom, way ahead of Jamaica, 86th Trinidad and Tobago 89th. Outside of Caricom, Puerto Rico was 32nd and the Dominican Republic was 101st.
The world’s most highly rated countries were Switzerland, Singapore, the US, Finland, Germany, Japan, Hong Kong, the Netherlands, the United Kingdom and Sweden while the worst ranked were Haiti, Sierra Leone, Burundi, Angola, Mauritania, Yemen, Chad and Guinea. Barbados’ ranking was higher than Cyprus, Hungary, Mexico, Peru, the Ukraine, Argentina and India.
When the Forum published its global index last year and ranked Barbados 47th, a decline of three places when compared with 2012, it also listed the “credit crunch” as a major obstacle for businesses, complaining that it was “hindering the capacity of local businesses to finance their activities by raising new equipment”.