Central Bank Governor Dr DeLisle Worrell says he views the marginal 0.5 per cent growth of the Barbados economy last year, as the start of a much-anticipated turn-around, following seven straight years of sluggish performances.
“You have to look at 2015 as the beginning of a sustained recovery. This is the first step in what has to be a multi-year effort to build a sustained recovery of the economy,” Worrell said, as he participated last night in a televised panel discussion on the performance of the economy.
“Even though we have benefited from the global resurgence in tourism, our growth is much higher than the average for the Caribbean and the rest of the world,” he added, saying, “that is testimony to the strength of our competitiveness in tourism.
“Having said that, that is just the beginning of what needs to be done. We also have a challenge to address the other foreign exchange sectors, the second most important being international business and the financial services and you know the challenges we face in that sector.”
The Central Bank Governor, who serves as a key economic adviser to the Government, said an inefficient public sector, low productivity and slower than expected expansion of the renewable energy sector were factors hampering growth.
Noting that the Barbados economy was foreign exchange-based, Worrell said the challenges facing the international business and financial services sector were being addressed “in a proactive rather than a reactive” way.
He said alternative energy stood out as the sector with the potential to transform the economy but its performance was below expectations.
“Right now our projections are that growth will average a little less than two per cent over the next five years. That is lower than it should be,” he said.
The Governor then listed two things he felt could make a tremendous difference.
“One, is . . . to improve the performance of our public sector. Our public sector right now is a drag on our economic performance,” he said. “That is something we need to address.”
“The other thing that can make an even more transformative event is to accelerate our drive and to commit ourselves at a national level to a programme of 100 per cent renewable energy. Were we to do that, and it is entirely possible, . . . we would double our potential growth rate permanently,” Worrell added.
University of the West Indies (UWI) economist Professor Andrew Downes agreed there were inefficiencies in the public sector but pointed to a need for improvements in the private sector, especially when it comes to “performance and productivity of operations”.
“You get the impression sometimes that all the inefficiencies are in Government. I don’t share that view. I think it applies across the sectors,” Downes reasoned.
“The challenge we have is that only in crisis we raise the issue of productivity or enhancing performance.”
Executive Director of the Barbados Chamber of Commerce and Industry (BCCI) Lisa Gale, another panelist on the programme, said while there was a “very small sign of increase” in confidence within the business community, facilitation remained “a big issue”.
“As a result, we have seen investments not move as fast as we would have wanted them to. A second thing for us would be the role that tourism played and the fact that tourism increased by some 14 per cent and no other sector has seen any [measurable] growth. We are a little puzzled by that,” said Gale.
The BCCI executive also complained that the current level of taxation was negatively impacting on some economic activities, resulting in the inability of some business people to make investments.
“I see that as a challenge,” she said.
“We are keen to see that there is a little bit of fiscal consolidation but we know that movement needs to happen and happen fast,” added Gale, though noting there was “a little light at the end of the tunnel”. (MM)