Economy will stutter this year, says CDB

Barbados is among seven of the 19 borrowing members countries (BMCs) of the Caribbean Development Bank (CDB) expected to record economic growth of less than two per cent this year.

The Barbados-based CDB is forecasting growth of 1.8 per cent for Barbados in 2017, a slight improvement on last year’s 1.6 per cent.

All BMCs are expected to record positive growth this year, lending to an expected overall average projected growth of 1.7 per cent for the region, compared to the disappointing 0.9 per cent decline recorded in 2016, the regional lending institution said.

The Central Bank of Barbados did not give an estimated growth rate for this year. However, Governor Dr DeLisle Worrell, in presenting the latest report last month, said the outlook was encouraging, and “the forecast growth rate for the next five years continues to be about two per cent”.

Speaking yesterday at the CDB’s annual media conference, Director of Economics Dr Justin Ram said growth in the region was expected to be driven by increased tourism activities and construction, mainly in the tourism industry.

Dr Justin Ram

At the same time he pointed out that high unemployment and underemployment continued to be a serious challenge for some regional states.

“Growth is consistently lower than in other small island developing states. Even as the region recorded positive growth in past years it continued to lag behind other small states,” Ram reported.

Seven other countries – Dominica at 1.7 per cent; Montserrat 1.5 per cent; St Lucia and Trinidad and Tobago one per cent each; The Bahamas 0.9 per cent; and Suriname 0.4 per cent – are expected to perform even worse than Barbados.

The CDB report showed that Barbados continued to lead the pack of borrowing member states with the highest level of debt at 145.3 per cent of gross domestic product in 2016.

“More than half of the BMC’s are saddled with debt ratios in excess of 60 per cent of gross domestic product, the level at which growth become a drag on growth,” Ram said.

“The economic cocktail also extended to foreign currency reserves which were below benchmark levels in some BMC’s in 2016. These declined year-on-year to less than the equivalent value of the global benchmark of three months of imports, for example, in Barbados. There were improvements in the Bahamas and Suriname but reserves remained below the three months threshold in these countries as well,” he said.

The CDB economist appealed to regional governments to act now to improve the Caribbean’s economic prospects, stressing that policymakers must be prepared to
“set the right environment to tackle the obstacles to growth”.

“That is to say the doing business environment including access to financing for micro, small and medium-sized enterprises and labour market reforms, which all of this could increase productivity and enhance competitiveness,” he advised.

“In this endeavour, it would be necessary to reform governance structures and institutions to support the new paradigm. Governments would have to be willing to stabilize their economies through fiscal and debt consolidation and to develop strong targeted social development programmes,” he added.

Earlier this year the International Monetary Fund revised downward its economic growth projection for Latin America and the Caribbean.

In its World Economic Outlook Update last month, the IMF said it was predicting 1.2 per cent growth for the region for 2017, which is 0.4 per cent less than the 1.6 per cent it had estimated in October last year.

8 Responses to Economy will stutter this year, says CDB

  1. Jennifer February 18, 2017 at 9:15 pm

    These reports keep looking more and more bleak as like one being in gross darkness. The thing is that there is so much that can be done to generate and tackle these obstacles of growth. We have come so far and yet going no where. What are the advisors doing and policy makers. Mind you, I fully understand the government and its basic commitment to the people also. Its like being surrounded on all sides.

    Reply
  2. jrsmith February 19, 2017 at 6:32 am

    There is $500 millions plus owing to the Barbados treasury, why isn’t the barbados government not going after this money, why not , why not……
    Dear , Mr, Priminister please tell us why you are not……….

    Most bajans should recall , the last (AUDIT GENERAL’S ) report , This is not forgetful .. A loan made to a company on a Tuesday and the company folded on Wednesday…..what is this and no one is accountable , as like you like it or lump it ,just like running the local rum shop…………………………………………………

    Reply
  3. Joy February 19, 2017 at 6:40 am

    When going after debt they must go after everybody not just the ones who aren’t well connected. When the Student Revolving Loan Fund printed a list of defaulters not a single well known defaulter was on it.

    Reply
  4. Jennifer February 19, 2017 at 9:34 am

    @jrsmith – well you don’t want to be too harsh on the people. Remember there is unemployment and underemployment. Not to mention people getting below the minimum wage by these rogue companies, who probably ain’t paying in either.

    Reply
  5. Jennifer February 19, 2017 at 9:36 am

    @Joy – good point, go after every body. The systems NOT IN PLACE is part of the problem too.

    Reply
  6. Peter February 19, 2017 at 11:31 am

    jrsmith. a few short years ago Chris Sinkler reported in Parliament that over $300 million was missing and unaccountable. Not One single effort was made to find nor report further on it. It was swept under the proverbial carpet in Parliament.

    Reply
  7. Peter February 19, 2017 at 11:52 am

    How can the CDB expect any better? The big time so-called executives n sit up there, collect very high tax free salaries, enjoy duty free benefits and privileges like duty free vehicles which their family drive about, bring in personal effects from liquor to food to clothing and even items for friends. and Not one single one of these appointed technocrats can come up with marketable business ideas and formulae to present to regional governments to help them develop their country through reduced energy, health care, agriculture – all types from farming to fishing, to food processing to animal husbandry, manufacturing, Tourism and even services. They only play politics. A sly, slender and subtle way claiming regional support. Mouth open, story jump out. I expect harsh criticism. Let CDB publish a report outlining how many projects they are working on, How many were approved, how many were rejected and reasons for their rejections,

    Reply
  8. jus me February 20, 2017 at 11:40 pm

    Man Get real!
    When yuh de tail ah de shirt yuh gotta expect tuh get some SH<TE!

    Reply

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