One of this island’s leading economists says he is not surprised by the International Monetary Fund’s (IMF) latest forecast for Barbados, given the Government’s ongoing fiscal consolidation programme.
The IMF is predicting that Barbados will achieve about 0.8 per cent growth this year, which is lower than the increases projected for Haiti, Guyana and several other Caribbean territories.
“If we are doing further fiscal consolidation this year, it wouldn’t be surprising to me if the growth rate falls below the normal growth rate of two or two and a half per cent,” Dr Justin Robinson told Barbados TODAY this afternoon.
“So a growth rate below that would be consistent with the Government having to pursue further fiscal consolidation to get the deficit down to a more sustainable level of two, two and a half per cent,” the University of the West Indies, Cave Hill academic said.
Having read the IMF report and being unaware of its forecasting model, Robinson, currently Dean of the Faculty of Social Sciences, said he could not comment specifically on that aspect. He said that after analyzing the situation, he concluded that the normal economic growth rate in this island was usually around two per cent.
“So when we look at the Estimates, the Estimates has a deficit of six per cent and I know the Government started to get the deficit roughly in line with the normal growth rate. . . . So I would expect that we would have to do some further fiscal consolidation this year. If we are doing further fiscal consolidation this year, it wouldn’t be surprising to me if the growth rate falls below the normal growth rate of two, two and a half per cent.”
Robinson’s comments came on the heels of those made by Prime Minister Freundel Stuart yesterday who sought to assure Barbadians that there was no need to panic in light of the IMF’s unflattering economic outlook for Barbados.
“Now, when you say to me that Barbados is at the bottom of the totem pole in the Caribbean, I do not think anybody in the Caribbean who hears that will be persuaded by it,” Stuart said in response to the IMF projection. “Barbados is certainly not at the bottom of the totem pole in the thinking of the people of the Caribbean.”
In the report, entitled Regional Economic Outlook For The Western Hemisphere, the IMF predicts 0.8 per cent economic growth for Barbados this year and 1.6 per cent next year. These figures compare poorly with the projection of 3.3 per cent growth in 2015 and 3.8 per cent in 2016 for Haiti, the region’s poorest country.
Moreover, the IMF is forecasting growth in the order of 3.8 per cent for Guyana this year and 4.4 per cent next year. At the top of the IMF’s Caribbean growth table is the Dominican Republic, which is expected to record robust economic growth of 5.1 per cent in 2015, and 4.5 per cent in 2016. Energy-rich Trinidad and Tobago, which was recently downgraded by Moody’s, is expected to grow by 1.2 per cent this year and 1.5 per cent in 2016.
The latest IMF growth projections contradict the Central Bank of Barbados’ forecast that the economy will grow by between 1.5 per cent this year and two per cent next year, based on the strength of the country’s tourism performance and further private sector investment of approximately $700 million.
In downplaying the IMF report, Stuart said he did not subscribe to the view that IMF officials commanded any “magisterial credibility, accuracy and perfection”.
“I really do not subscribe to any of that but they are institutions to which we belong. We have to respect them, but I do not believe that they have perfect solutions to anybody’s problems. Had they had them, this current crisis was the best opportunity to show that they had them,” Stuart argued.