Former president of the Barbados Bankers Association Horace Cobham believes the local economy is now past its worst and headed in the right direction.
However, speaking to Barbados TODAY ahead of the Central Bank’s release of its half-year report, which shows the economy recorded a 1.3 per cent growth, Cobham said he would not get overly excited about any economic expansion that’s below two per cent.
The noted banker said it was critical for Government to get the country’s fiscal deficit under control, while ensuring the environment was right for increased economic activity.
In his mid-year report released today, Governor of the Central Bank of Barbados Dr DeLisle Worrell said between April and June this year the fiscal deficit widened by $28 million to $204 million and the surplus fell by $14 million, compared to same period last year.
Overall, growth for the first six months of 2016 also slowed to 1.3 per cent, down from 1.7 per cent between January and March. This means the growth for the April to June period was just over 0.9 per cent.
In a wide-ranging interview with Barbados TODAY, Cobham stressed the need for further economic expansion, explaining, “when you start to get to two and more per cent there is much more broad-based impact on the economy. So the only thing I can say about one per cent growth in the Barbados economy is that it is a trend in the right direction, meaning that, hopefully, you have bottomed out and things are moving in the right direction. So that is the most positive thing I can say about it.”
He said while he was not in a position to give instruction to Government about specific areas it should tackle, getting the fiscal deficit under control was critical.
“At some time it [the deficit] needs to turn positive. If it doesn’t turn positive it means that you have to finance it. Once you have to finance it, it means you have to borrow the money, and if you have to borrow the money you have to pay it back, and if you have to pay it back it has to come from somewhere,” he reasoned.
Cobham also urged national patience, saying while it was understood that some people wanted Government to move faster in getting the deficit under control, it had to do so cautiously, taking into consideration its social responsibilities.
Commenting on the latest unemployment figures, the former banker said he believed a 9.3 per cent rate for joblessness was still too high for Barbados.
“I still think that unemployment is high. So it means we have to create more employment opportunities for people,” Cobham said.
He warned that increased consumer spending would not redound to the desired economic growth since Barbados was not a manufacturing but a services and consumption economy that was losing a lot of money to imports.
However, he suggested that tourism was critical, so too the promised construction projects, which should lead to “a meaningful impact”, and ultimately increased confidence both locally and aboard.
“That is when you will have people stepping off the sidelines and making investment decisions, you will see businesses making more investment decisions . . . and therefore they would feel more comfortable in making an investment that they feel could pay in some time,” Cobham told Barbados TODAY.