sloweconomicgrowthBarbados is facing another three years of economic lethargy.

While Government is preparing to unveil a plan to adjust spending and implement plans aimed at returning growth to the economy next year, one of the region’s leading stock brokerage firms believes such a turnaround is unlikely.

Trinidad and Tobago’s Bourse Securities Limited also said the Freundel Stuart Administration’s strategy of a gradual fiscal consolidation was “optimistic” at best, and could keep current worrying debt levels high.

In a new review of the island’s economic prospects released this month to be used by the public, including potential investors “for information purposes”, Bourse appeared cautious about the prospects for Barbados.

“The island has been experiencing slow growth since the global financial crisis and its inability to deal with the weak global recovery is resulting in declining economic metrics. Barbados depends considerably on tourism and its off-shore business sector for growth,” it said.

“With sluggish recovery in tourism and increasing pressures on offshore financial services regulations, Barbados will likely experience a few more years of lethargic economic performance. The challenge is … how will Barbados strategically and successfully navigate the current situation in an attempt to revive its economy,” it added.

It also said Government “faces difficult choices in managing the economy, and in the absence of significant corrective measures, debt metrics will continue to rise”.

“Proposals to boost economic growth may assist in generating much needed revenues, however, at the risk of continued deterioration of the nation’s financial position and increasing pressure on the foreign currency reserves,” the regional firm stated.

Bourse has told potential investors that Government’s strategy of gradual fiscal consolidation “relies on optimistic growth forecasts, improvements in tourism and business sectors, and tight control of expenditures”. “These will be difficult and challenging to achieve and as a result, Barbados debt measures may continue to increase or remain elevated,” it noted.

“The nation also faces reduced flexibility to respond to any future economic shocks, given its fixed exchange rate which limits the Government’s ability to pursue monetary policy adjustments. Analysts forecast that growth and unemployment is expected to improve over the next few years once the tourism sector sees improvement.

“In the interim, Barbados will have to utilise these measures to tackle concerns of competitiveness and growth, while prudently managing the debt of the central government,” it added. Bourse said “once effectively navigated, Barbados will be well on its way to restoring investor confidence and promoting economic stability over the long term”. (SC)

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