More of the same
CDB president predicts little economic growth for barbados
After a difficult economic year, it’s going to be a case of “same ole, same ole, more of the same” for Barbados and other service-based economies in the Caribbean.
The Caribbean Development Bank’s President, Dr. Warren Smith, issued the unwelcome but unsurprising forecast this morning, as he predicted economic growth of no more than one per cent, and possibly less, for Barbados this year.
With no sign of meaningful recovery in major markets in North American and Europe, the official said there was a need for the island and it’s neighbours, which also had small open economies heavily dependent on tourism, to take action.
But two of Smith’s colleagues went further in directly commenting on the Barbados situation, with Acting Director of Economics, Dr. Juliette Melville, saying “the Barbados situation is a bit worrying” and Carl Howell, the CDB economist responsible for Barbados, recommending “urgent attention at fixing the fiscal dynamics in the country”.
The officials all spoke at a CDB Press conference which reviewed its own performance and that of its borrowing member countries last year, making predictions for 2013.
Melville said she was concerned about Barbados’ performance “because when you look at the information on tourism the tourist arrivals are lagging behind that of the region”.
Further concern was the fact that although there was some recovery in UK travel Barbados was still lagging behind other tourist destinations in three region, which she said “suggests that there are some structural issues that are involved in the competitiveness of the sector”.
Howell, who has direct responsibility for overseeing the CDB Barbados portfolio also voiced concern. He said “the biggest problem facing the Barbados economy is really one of debt overhang and one of a difficult fiscal profile”.
“Before the country could really take off I think it has to pay urgent attention to that. We have had involved conversation with the country as to some possibilities as to where it can go to treat with the debt problem, but … difficult choices need to be made in the case of Barbados,” he said.
“I would argue that given the already difficult fiscal effort that the country is making perhaps there is not much more the country can do on the revenue side so you need to turn your attention to expenditures… You can look at goods and services, you can look at wages and salaries or you can look at transfers and we have argued that perhaps the whole issue of loss-making public enterprises is something that the country may have to pay some attention to.
“But the country would have to pay urgent attention at fixing the fiscal dynamics in the country before the country could go forward in any quick fashion.”
Smith himself called for adjustments to the fiscal and debt positions, but said there was “also need to get economic growth”.
“In some of the Eastern Caribbean destinations reduced airlift was a problem, both out of Europe and also out of North America. The UK market was another major factor,” he noted.
“Those of you who are living here in Barbados would be aware Barbados is a special market for United Kingdom and what you are having there is a combination, I suspect, of difficult economic circumstances in the UK itself combined with the Air Passenger Duty tariff which has been imposed and which has been such a problem for many Caribbean economies.” (SC)