$63m. shortfall

bim records substantial drop in foreign exchange reserves

Barbados has recorded a $63 million decline in its foreign exchange reserves.

In making the announcement in his half-year economic review this afternoon, Governor of the Central Bank of Barbados, Dr. Delisle Worrell said the island’s foreign reserves stood at $1.3 billion at the end of June this year, a reduction of $63 million since December 2011.

Worrell noted though, that this level of reserves was no lower than the amount recorded at the end of 2008, the year the industrial economies fell into the worst recession in recorded history. In his examination of this country’s economic performance during the past six months, the top economist also said the international recession, as expected, had slowed the inflow of foreign exchange to Barbados.

Worrell said this had therefore limited the prospects for expansion in an economy which needed foreign exchange in order to register sustainable growth. The Government’s principal economic advisor put real growth in the first half of this year at around 0.6 per cent. He attributed this to the recession in the industrial world, which he explained had been compounded by the European economic and financial crisis, further containing foreign investment in emerging markets like Barbados.

There was some good news in tourism though, he reported. Output in that sector was estimated to have risen 1.8 per cent in the first half of the year. Worrell said the largest increase came from the CARICOM area, particularly Trinidad and Tobago, where arrivals grew by 35 per cent.

“Arrivals fell 1.5 per cent over the five-month period ending May, but there was a 6.4 per cent increase in the average length of stay,” pointed out the central bank governor.

Visitor numbers from Canada were up three per cent, but Worrell explained that the number of visitors coming from the UK and US markets, fell by 10 per cent and four per cent respectively.

Worrell also disclosed that while 21 fewer cruise ships docked in Barbados, arrivals still went up by 2.5 per cent. He reported, too, stability in the length of stay of visitors from the US, UK and Canadian markets, with slight growth in those coming from Trinidad and Tobago and other CARICOM states. †The closure of Almond Beach Village and the restructuring of some smaller hotels, contributed to a seven per cent contraction in hotel room capacity.

However, Worrell noted, construction grew by 1.3 per cent due to private commercial building activity, the continuation of tourism-related projects, and public sector capital ventures. He announced, as well, that the number of active companies in the international business and financial services sector, increased by three per cent. The central bank governor also informed the country that inflation appeared to have slowed down slightly, with projected 12-month average rate to June at about 8.6 per cent, compared to 9.5 per cent in December.

“Inflation in the prices of food appears to have abated since the last quarter of 2011,” revealed Worrell.

In addition to the job loss in the tourism sector, he observed, there was also some retrenchment in the manufacturing industry and non-sugar agriculture, resulting in an unemployment rate estimated at 11.8 per cent at the end of March 2012. When Worrell compared this figure with that for all of 2011, he came up with an average unemployment rate of 11.2 per cent. (EJ)

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