‘Expect more hardship’
It is a new year, but 2013 will not be a happier one for the Barbados economy.
That’s the prediction of the Economic Commission For Latin America and The Caribbean, which has become the latest respected international institution to forecast continued difficult times over the next 12 months.
The United Nations body said it expected growth of no more than one per cent this year, adding even this marginal increase could evaporate if the economies of Europe and the United States did not improve.
In its overview of things to come in Barbados in 2013, the organisation stated: “The Barbadian economy has continued to suffer from the economic fallout of repeated global crises, and growth of only 0.2 per cent in 2012 will be followed by growth of just one per cent in 2013, on the strength of a modest upturn in construction and in long-term tourism capital inflows starting towards the end of 2012,” ECLAC predicted.
“This projection is, however, contingent on economic prospects in the main tourism source markets of Europe and the United States.”
While Central Bank of Barbados Governor Dr. DeLisle Worrell is due to give his review of the economy’s performance last year in another two weeks, the regional ECLAC said Barbados’ economy “maintained an extremely sluggish trajectory during 2012, recording growth of a mere 0.2 per cent during the year”.
“This performance reflected the protracted weakness of the global economy, which resulted in a small decline in tourism value added, the country’s main economic driver, and in manufacturing and agriculture,” it stated.
“The economy was, however, bolstered by modest expansion in construction and international finance. The lacklustre economic growth was reflected in a falling rate of inflation, a slight increase in unemployment, a wider fiscal deficit and a marginal increase in public debt.
“The fiscal deficit stood at 5.9 per cent of GDP during the period April to September 2012, representing a deterioration of 1.2 percentage points over the same period in 2011. This was on account of a two per cent reduction in overall tax revenue, as personal income taxes and VAT fell by 13 per cent and four per cent respectively, which in turn reflected the low level of economic activity in the real sector during the period.”
In it’s overall projection for the region, ECLAC said Latin America and the Caribbean “will see stronger economic growth, despite ongoing uncertainties at the international level, particularly the difficulties faced by Europe, the United States and China. It said economic growth in the region this year “will grow by around 3.8 per cent, thanks mainly to the recovery of the economies of Argentina and Brazil, as well as ongoing buoyant internal demand in several countries”.
“The region will end 2012 with GDP growth of 3.1 per cent, which is higher than the expected figures for world growth (2.2 per cent), but lower than the 4.3 per cent posted in 2011. This shows that the world economic crisis had a negative but not dramatic impact on the continent, as the region maintained a certain resilience to external shocks throughout the year,” ECLAC said. (SC)