Barbadians are being warned to brace for continued economic difficulties for the rest of the year, with the spectre of the country’s “precious” foreign exchange rate coming under threat.
In his review of the local economy for the first half of the year, Governor of the Central Bank of Barbados, Dr. Delisle Worrell cautioned today that the current problems being experienced by the country were by no means over, even as growth, employment and inflation indicators remained less than satisfactory.
Worrell is forecasting overall growth at about one per cent and no significant gains in the level of employment. However, he added, any alternative economic strategy was likely to speed up inflation and depress growth and employment, because it would exhaust foreign reserves and threaten the exchange rate.
He indicated that the answer to better days ahead was for the Government to keep faith with its existing Medium Term Fiscal Strategy.
“With patience and determination on the part of all, the current strategy charts the path to future recovery,” Worrell insisted.
He argued that the focus of the fiscal strategy for 2012 was to maintain a stable balance between the demand for, and the supply of foreign exchange, so that foreign reserves remained adequate and the exchange rate secure.
“This is supported by the 2012 Financial Statement and Budgetary Proposals, which were designed to boost foreign earnings without increasing the fiscal deficit,” asserted the governor.
The Government’s economic advisor noted that the global environment continued to constrain prospects for a vigorous economic recovery, as the poor performances of this island’s main trading partners, the UK and US, were still depressing the demand for Barbados’ tourism services.
But, as he put it, modest gains were expected from the gradual improvement in length of stay. Worrell assured that private investments in tourism-related projects and corporate building activity were anticipated to further expand construction output for the remainder of 2012. “However, foreign exchange sectors are not projected to growth significantly in 2012. Fiscal strategy is dedicated to achieving the targets of the MTFS, and to contain the overall demand for foreign exchange in the country,” asserted Worrell.
In the words of the governor, limited expansion was therefore likely in the non-tradable sectors. He expected, though, stronger private investments, supported by Government’s initiatives, thus laying the foundation for future growth.
The veteran economic advisor observed that he expected positive results from last month’s Budget, that announced incentives to support business activity in renewable energy, as well as adjustments in corporate tax rates and the introduction of new legislation, designed to boost this island’s competitive position in the international business and financial services sectors.
He said too that major ongoing investment in the tourism sector may bring in over $100 million in private capital inflows. (EJ)