Economic activity in Barbados will continue to be “weak”, but the island has enough financial room to “hold out”.
That’s the prognosis of Jamaica Money Market Brokers, the Caribbean’s largest investment brokerage firm, in a new analysis on Barbados.
“Given the sluggish outlook, economic activity in general and revenue inflows should be weak. Tourism flows should be reduced, the net international reserves may be negatively affected by lower net capital inflows and business activity may be weak given the downgrade to non-investment grade,” JMMB said in its November investment and sovereign research document.
“Despite these negatives, however, Barbados does have some room to continue to hold out, given its relatively low debt ratios and tight fiscal controls.”
The organisation noted that because Barbados was a small open economy “the global headwinds should indicate the direction of growth”.
In this regard, it noted that happenings in the important United States and European markets would likely determine Barbados’ immediate economic future.
“With the ‘fiscal cliff’ in the US fast approaching and the possibility of a breaching of the debt ceiling again causing a bottleneck in congress, growth is a concern for the US,” JMMB stated.
“The Eurozone debacle is far from over and recovery is not anticipated over the next two years. Growth in emerging markets has also taken a slight hit with investors now tempering expectations of robust economic activity for China, India and Brazil,” it added. (SC)