A leading investment firm is warning against expectations of measurable economic growth over the next three years.
In addition, Chief Investment Officer of Fortress Fund Manager Peter Arender said the recent upgrade of the recent local currency rating of B- by Standard & Poor’s (S&P) on the domestic debt issued in the recent debt exchange was no reason to celebrate just yet.
Last Friday, S&P also raised its long- and short-term local currency sovereign credit ratings on Barbados to ‘B-/B’ from SD/SD’ (Select Default).
“I think coming out with a B- rating [on the domestic debt] is more of a technical thing – old bonds are gone and new ones are there. There is also the question of what does a single B- credit rating mean. That is still a fairly stressed credit rating,” Arender told journalists during one of the company’s ‘lunch and learn’ sessions at its Hincks Street, Bridgetown office.
“I don’t feel that we got necessarily a magic wand being waved. It is something to build on, moving from default to single B- is absolutely something to build on and we hope that it continues to get better. But at this stage it is too much to hope for that you are going to have everything suddenly fine in terms of confidence. I think a lot of the other moves that hopefully are being made structurally, will help investment come but we will have to see what happens,” he explained.
In relation to the country’s overall economic performance, Arender said Barbadians should not expect much growth over the life of the next three years in light of the current restructuring exercise.
But he predicted that after the four-year International Monetary Fund-backed Barbados Economic Recovery and Transformation programme, the country should be “on a better trajectory” for growth.
“I think we are going to have a couple years of slow economic growth here as the economy rebuilds. Government spending has fallen and the taxes have increased, and this
means the economic growth will be lower than it otherwise would be. That is just a fact. While there are hopefully other constructive things going on in the background that will lead to better growth down the road, that is not going to happen overnight,” he said.
“The things that are going on now, the structural changes and the adjustments, the growth is going to come about three years plus down the road. We have a couple years of what we call fairly flat economic growth. Having said that, it should be no surprise to Barbadians. We have had that for the last couple of years,” said Arender.