by Shawn Cumberbatch
The major economic recovery Barbados has been hoping for might elude it for at least another two years.
As officials here rely on a good winter tourist season to spur a more buoyant 2013, management of the Caribbean Development Bank today delivered some unwelcome news.
Both the institution’s President, Dr. Warren Smith, and it’s Director of Economics, Dr. Juliet Melville, said the prospects for Barbados and its other neighbours heavily dependent on tourism and “offshore financial services” were not good.
“At the moment we are not too pessimistic but we are not overly optimistic as to what 2013 and 2014 will bring. A lot of it is really outside of the control of the region. There is so much that they can do, but a lot of it is beyond them. It depends on the strength of the recovery in the US and … the euro area,” Melville told the media during a news conference at CDB headquarters in Wildey, St. Michael this morning.
“The prospect going forward is not as bright as one would hope. The region has, it appears, overcome the worst of the global financial crisis, but there are not yet on a strong recovery trajectory.
“A number of the countries are still experiencing very subdued or negative growth. We do not expect a number of them to grow beyond one to two per cent for the next year or so, mainly because they are dependent on the tourist industry and the offshore financial sector to some extent and the global economy is not as favorable as one would hope.”
She singled out Trinidad and Tobago, Belize and Guyana as the “bright areas” which had “weathered the storm and we expect them to continue to do so”, but noted that the other group, including Barbados, continued to be in the middle of what Smith called a major “financial storm”.
Melville said the CDB was “continuing to provide support to them through our technical assistance and through our capital projects in the hope that they would be better prepared to take advantages of the opportunities that would arise as the global economy improved”.
“The way how our economies are structured we are very vulnerable to what happens in the external environment. There is no doubt about that, but within that constraint we still have to do the best we can and what countries are doing is stabilising their fiscal situation,” she explained.
“A number of the countries have had to undertake expansionary fiscal policies in an attempt to stimulate economic activity to bolster or to supplement their performance in the wake of the collapse of the global economy, but now they are at a stage where they need to stabilise and strengthen their fiscal position. They also need to pay attention to their debt situation.”
The official said a major part of the problem was that when the financial crisis hit in 2008, few of the CDB’s member countries had strong fiscal or debt positions, something which the crisis aggravated.