Economy contracts, growth prospects revised downward

Central Bank Governor Cleviston Haynes says the Barbados economy contracted in the first quarter of this year.

Delivering his review for the January to March period moments ago, he said the contraction was estimated at 0.7 per cent.

Haynes said this performance reflected a decline in real output from the tourism sector, a slowdown in construction activity, the late start to the annual sugar harvest and the slowdown in domestic demand.

Import cover stood at 6.9 weeks at the end of March and this is well below the 12-week minimum.

The Governor said the fiscal deficit fell by almost 1.5 per cent to 4.2 per cent in the fiscal year which was above the small surplus targeted by Government in the May 2017 Budget.

Haynes said the Bank’s growth forecast is now in the region of -0.25 to 0.25 per cent. This is down from the 0.5 per cent to 1 per cent projected at the end of last year.

The economist said improving the outlook requires Government’s fiscal strategies to embrace durable expenditure reforms, including for state-owned enterprises and improved tax administration. (NB)