If the tourism industry is to continue to be Barbados’ largest foreign exchange earner it has to evolve.
That is the view of new president of the Barbados Economic Society (BES) Simon Naitram, who has described a slowdown in the sector despite a 2.8 per cent increase in visitor arrivals in 2018 as “puzzling”.
His comments have come in response to Governor of the Central Bank Cleviston Haynes’ review of Barbados’ economic performance for 2018.
During that review this morning Haynes revealed that Barbados’ economy had contracted by 0.6 per cent, mainly because of a sub-par performance by the tourism sector. Naitram said Government needed to take notice of this development.
“The value the country gets from tourism is a combination of two things: visitor arrivals and visitor spending. And while more visitors visited Barbados, they have been staying for shorter periods and spending less.
“This sends an early warning about the structure of the tourism industry. The tourism industry’s contribution might continue to underwhelm, as Brexit looms over the British economy and new tourism taxes take effect. If tourism is to be a viable source of broad-based economic growth into the future, then the industry needs to evolve. This evolution will need innovation, investment, and broad social engagement,” Naitram said.
While noting that government’s debt restructuring had reduced the debt-to-GDP ratio to 126.9 per cent of GDP by December 2018, down from 155.8 per cent in September 2018, he said this was due to the combination of debt restructuring and the fact that Government’s fiscal measures had generated a surplus of revenue over total spending.
However, he warned that government might have to introduce further taxation to spur economic growth.
“If economic growth remains weak in the short to medium-term, the Government may continue to collect less revenue than it expects. The Government may then need to resort to new expenditure or tax measures to meet its fiscal target. Capital expenditure is an easy target for spending reduction, but capital expenditure has a large positive impact on economic activity. Reduction in public investment would do severe damage to Barbados’ ability to grow,” Naitram cautioned.
“The need for growth is pressing. We are under no illusions that fiscal measures alone will stabilize the nation’s debt. We need growth in economic activity to reduce the burden of the country’s debt obligations.”
The new BES head said since the implementation of the Barbados Economic Recovery and Transformation (BERT) programme signs of reform were encouraging among them, the Planning and Development Bill 2019.
“Reforming the public sector serves two purposes: reducing government spending, and improving the environment for Barbadians to invest and do business.
“Much like the West Indies cricket team, the Government of Barbados appears to be on the right track. Consistency, stamina and broad social support are needed to see the job to its conclusion,” Naitram said.