WHAT MATTERS MOST: Tourism upswing not enough
It is understandable that any sign of improvement in any area of the Barbados economy is encouraging, given the magnitude of decline and consequent suffering that Barbadians have had to endure above and beyond what is typically expected in a post-recession period. But the notion that the slightest improvement represents recovery is a message of false hope that is coated purely in politics with little regard for the seriousness of the bigger economic picture.
The Government has shown a lack of appetite for anything economic, preferring to cast everything in terms of its social importance. Barbadians were boldly told that Barbados is not an economy; it is a society. The country’s social decay clearly shows that the two are inextricably linked.
Furthermore, our economic circumstances were played off as being totally the blame of the international economic environment.
Fascinatingly enough, however, there is an upswing in tourist arrivals so far for the winter season and it is not attributed to the turnaround in the economies of the United States, the United Kingdom and Canada, but rather to the decision to split the former Barbados Tourism Authority into separate entities. The Barbados Tourism Marketing Inc. (BTMI) was formed less than six months ago but in an industry that requires significant lead time to market its products, the BTMI is said to be responsible for the performance to date in the winter season.
The true acid test of the winter season would be reflected in the performance of the country’s
foreign reserves during the months of January to April, which is the period when the stock of foreign reserves at the Central Bank ought to increase. The magnitude of the increase is then the measurable indicator of one of our biggest economic requirements at this time – foreign exchange.
At the micro level, the taxi-men and other service providers are expected to benefit. In the case of the first group, the cruise ship passengers are vital. There is no doubting that the tourism sector is best poised to help in the revival of the economy. But let us not take a six for a nine in believing that economic recovery can be defined in inches when the economy fell by feet into an economic well.
The jury is still out on the true size of Barbados’ economic drop since 2008, as the Central Bank continues to lose its once impregnable position as the sacred voice on the economy. The increasing absence of its voice has created further doubt not only with respect to its analysis, but also the presentation of the economic data.
The biggest question mark now hangs over the size of the country’s real economic activity; a matter raised by David Ellis during the one and only panel discussion that replaced the long-standing Press conference of the Central Bank governor.
Given past behaviour, there ought to be an eagerness to hold the second panel discussion as it was promised that there will be two per year. The time and date of such discussions ought to be known way in advance of the time, but there is a contempt for Barbadians that has become part of both the economic and political landscape that is disgusting, to say the least.
In the prevailing environment where the slightest improvement in any economic indicator is being promoted as a recovery, it would not be surprising to hear that the second panel discussion is around the corner. It is becoming increasingly difficult to determine to whom the people in position of power and authority are accountable.
In the circumstances, there is a need for some timely economic reminders. The unemployment rate is now hovering around 14 per cent, more than double what it was in 2007. The country’s national debt has doubled over the same period.
The fiscal position is at its worst ever as a result of excessive spending and ongoing contraction in Government revenue despite the increases in old tax rates along with new taxes. Even the reductions in the gasoline prices and electricity bills, while benefiting households and businesses, have negatively impacted Government revenue and by extension the Government’s fiscal position.
From the perspective of the international markets, the country’s credit rating is at an all-time low because of persistent downgrading. And notwithstanding some turnaround in the relevant economies, it is impossible for an upswing in tourist arrivals to be a panacea for instantaneously wiping away some of Barbados’ embedded economic ills that require appropriate and prolonged treatment.
• Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party adviser on the economy. Email [email protected]