Central Bank report fails to excite private sector
Jeremy Stephen has described this week’s report by the Central Bank on the performance of the economy as nothing to shout about.
Central Bank Governor Dr Delisle Worrell annonced that the economy grew by 0.5 per cent in the first half of this year, and that it was forecasted to grow by two to 2.5 per cent over the next three years.
Stephen told Barbados TODAY that while this growth, driven by tourism, was commendable, it was nothing to “shout about”, since there should have been a greater increase in tourist spend, based on the level of the rise in arrivals.
“That is the first thing that has to be noted . . . . Another thing that was noticeable in the report was one where . . . our productivity still stayed low, and while labour costs remain much higher than productivity [it was] also flat,” said Stephen.
“So I wish to challenge the assumptions that we are in the forecast of a two per cent [over the next three years]. I challenge it on the grounds that it can only be possible if low oil prices remain,” said Stephen, adding that government debt remained high.
Pointing to the dip in private capital inflows for the first half of the year, Stephen said: “It has proven that going into the last half of the year we really have to try to find ways to increase productivity and workers’ spend within the economy to really sustain, and to help, the fiscal deficit to be arrested, in order to reach that four per cent [fiscal deficit] target”.
He suggested that other ways might result in more taxation in the future “or rougher, tougher and sharper government expenditure cuts”.
The BES president said he believed if Government were to communicate more effectively and earlier how it intended to cut the deficit, it would be met with “a renewed confidence in the economy and then investors would be more opened to investing”.
Meanwhile Chairman of the Barbados Private Sector Association Alex McDonald said the 0.5 per cent growth was “anemic”.
“While the private sector has been calling for a less costly government, we understand what the implications are. But we don’t know how they are going to get it done, and the details of that restructuring are going to be very interesting for us to see. . . So the private sector is exhorting the Government to deal with its costs. We understand the implication of that, but it is always how are they going to get that done,” McDonald told Barbados TODAY.
He added that private sector officials anticipated greater stability in the industrial relations climate and clarity on Government’s policies in order to adequately plan.