by Shawn Cumberbatch
The last time the Barbados economy performed this badly David Thompson was still alive and in charge of Government and its finances.
That’s the situation facing the late leader’s successor, Prime Minister Freundel Stuart and his Minister of Finance Chris Sinckler, with today’s announcement from the Central Bank of Barbados that Barbados did not have even a fraction of economic growth in 2012.
The real “growth” of 0.0 per cent reported by Central Bank Governor Dr. DeLisle Worrell is the worst gross domestic product report card since the 4.1 per cent decline of 2009, and follows growth rates of 0.3 and 0.8 in 2010 and 2011 respectively.
And following a challenging year when long stay tourism arrivals decreased by 6.2 per cent and manufacturing and agriculture continued their decline in foreign exchange earnings, the leading economist predicted Barbados’ economic growth this year would be no more than 0.7 per cent.
“The flat growth performance resulted from declines in tourism, other traded services and manufacturing. Output in the non-traded sectors grew by only one per cent because of fiscal spending limits and the reduction in the traded sectors,” Worrell said in his annual economic review released this afternoon ahead of him answering questions from the media tomorrow.
“Several tourism related projects were ongoing, but foreign investment in real estate projects was down about 16 per cent. The fiscal deficit for the April to December period is estimated at 6.4 per cent of GDP, compared with 5.2 per cent in the same period of 2011.
“Revenue from personal taxes was down 10 per cent and VAT receipts fell two per cent, but there was a nine per cent increase in property taxes. Subsidies to government entities rose by two per cent, and interest payments were higher by four per cent. Capital expenditure fell by four per cent,” he added.
He pointed out, however, that the island’s foreign exchange reserves increased during the year to $1,467 million, and the import cover at the end of last month was 18 weeks, “even though there was no real growth in the economy in 2012”.
“Output and foreign exchange from tourism contracted, with a 6.2 per cent decline in long-stay arrivals and an increase of only 4.3 per cent in the average length of stay,” the governor noted.
“However, import expenditure was contained, and the gap between import payments and foreign earnings was smaller than for 2011. Foreign exchange inflows on the capital account held up, thanks largely to the receipt of $167 million from the sale of Barbadian shares in the former Barbados National Bank.”
As for the prospects this year, Worrell said based on the most recent International Monetary Fund forecast of average 1.7 per cent growth for Barbados’ major trading partners the United States, United Kingdom and Canada, and a 1.2 per cent improvement in consumer spending in these markets, “real economic growth for Barbados in 2013 is forecast at 0.7 per cent”.
“In addition, private capital inflows of $600 million are anticipated for activity in the tourism and construction sectors. No significant gain in employment is expected. Based on current trends in international commodity prices for food, and the IMF’s projection for fuel, domestic inflation could fall to the region of five per cent for 2013,” he noted.
Worrell also said the country’s tourism performance was hurt by the loss of Almond Resorts, the UK’s imposition of the Air Passenger Duty, and REDjet’s demise.
He added that 15 per cent decline in cruise passenger arrivals between January and the end of last month “stemmed largely from the shift of some cruise ships to other destinations and a renewed focus on the Mediterranean region by some of the major cruise companies”, a factor most evident during the summer. firstname.lastname@example.org