Governor hopeful about growth

The Central Bank does not share the International Monetary Fund’s (IMF) pessimism about Barbados’ economic growth prospects.

However, acting Central Bank Governor Cleviston Haynes said this could change depending on tourism growth and the pace at which new private investment took place.

Giving the economy’s third quarter review yesterday, he said the economy grew by 1.4 per cent in the first nine months of this year and was forecast to grow between one and 1.5 per cent this year and next year.

Recently, the IMF lowered its Barbados economic growth forecast to 0.9 and 0.5 per cent for this year and next year, respectively.

Haynes told the media yesterday: “I hope I am not being overly optimistic but as we get more information, forecasts may change. I have not yet had the opportunity to discuss with the fund what precisely are the assumptions underpinning their forecast versus the forecast that we have made.

“But I think, as you would appreciate, we ourselves are still in a position of trying to assess the full impact of the measures which were implemented earlier this year.”

The economist said the Central Bank’s “initial assumption” was that the impact of the most recent austerity measures “is likely to be greater in 2018 than it is in 2017”.

However, he said that even when the bank factored in the impact of fiscal consolidation, “we also will have assumptions in there about what we anticipate for tourism growth and what we anticipate for private investment”.

“And that is really quite critical to the growth forecasts going forward, because, on the one hand, while we want to dampen consumption through the fiscal measures, we also want to be able to increase foreign-financed investment and which would feed into our construction sector and some of the other non-traded sectors,” he explained.

“And so what we are hoping is that will offset some of the reductions in domestic demand arising from the fiscal measures.”

In its latest economic outlook, the Central Bank said “the continued delay or the slow execution of large-scale, tourism-related projects raises the possibility of slower than projected growth”. (SC)