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Central Bank Governor: Economy grows by 5.5 per cent

However, performance continues to be restrained by the protracted global presence of the COVID-19 pandemic

Central Bank Governor: Economy grows by 5.5 per cent
Governor of the Central Bank Cleviston Haynes (FILE)

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Barbados’ economy grew by 5.5 per cent in the second quarter, Central Bank Governor Cleviston Haynes reported today.

He said this signalled “an emerging mild recovery” and that the immediate challenge was to “build on the green shoots of growth experienced during the second quarter”.

However, giving the bank’s economic review for January to June, Haynes said: “The performance of Barbados’ economy continues to be restrained by the protracted global presence of the COVID-19 pandemic.

“The uncertainty created by the high incidence of COVID-19 cases at home and in our key source markets for tourism, international travel restrictions and the national pause in February have dampened economic activity.”

The Governor noted that “following the sharp decline during the preceding 12 months, preliminary data suggests that the economic recovery has started”.

“With the ongoing weakness of the tourism industry, the non-traded sectors which were particularly hard hit in the corresponding quarter a year ago served as the principal source of modest growth during the second quarter. Despite these gains, private spending remains well below pre-COVID levels,” he added.

With the economy having grown by an estimated 5.5 per cent between April and June, Haynes said the improved performance “reflects the gradual easing of travel restrictions and higher domestic private sector spending relative to last year when the economy was under lockdown for much of the quarter”.

Activity in the tourism sector, Barbados’ main economic engine, remained subdued during the review period, the bank said.

In terms of other sectors that earn foreign exchange, Haynes said manufacturing output improved, while agricluture declined.

Weak economic activity continued to place pressure on employment levels, while food prices, especially for vegetables, slowed in the first half of the year.

Barbados’ international reserves were $2.7 billion, an $88 million increase for the six-month period. This was helped by funding from the World Bank and International Monetary Fund.

Haynes also said COVID-19 “continued to adversely impact the public finances, reducing revenue and raising public sector spending”.

In his outlook, he explained: “Given the uncertainty associated with global developments, the bank has left its economic growth forecast unchanged at between one per cent and three per cent for 2021.

“This outlook hinges on the speed of the recovery in tourism and the reports of planned increased airlift over the next six months to cope with pent up demand for travel bodes well for energising a strong, but gradual recovery.”

He cautioned that “the environment remains hostile with new virus mutations and the continued uneven distribution of vaccines across the world.”

The Central Bank will give its next economic report in October. (SC)