After contracting slightly in the final three months of last year due to a weak performance in the tourism sector for that period, Barbados’ economy is forecast to be flat in 2019.
That glum news was revealed by Governor of the Central Bank Cleviston Haynes this morning during a press conference to review Barbados’ economic performance for 2018.
During his review last November, Haynes had said economic activity contracted by 0.5 per cent during the first nine months. However, the Governor said in the last quarter the country’s economy had contracted a further 0.1 per cent.
He explained that this was due to the fact that tourism did not perform as well as expected, with cruise visitors for the year falling by almost 10 per cent.
“The major change there is that tourism was slightly weaker than we would have had at the end of September, so we will see that the rate of growth for tourism has fallen to 0.6 per cent itself and that largely explains the performance.
“Part of that is due to the softening of arrivals during the month of December and there was also some weakening of the cruise sector, although the cruise sector is relatively small in the overall scope of the assessment of the tourism sector,” Haynes said.
He said tourism output had fallen significantly by 1.6 percent from 2.2 per cent in 2017. This, he said, was due to the fact that the average length of stay had declined, despite long stay arrivals being 2.8 per cent higher than the previous year,
His initial forecast for 2019 was not much better.
“Over the past decade, the average rate of growth was -0.7 per cent. Revitalizing growth is therefore critical, but the forecast for 2019 is for growth to be flat. Tourism is expected to perform favorably due to an anticipated expansion of airlift, special events like the English cricket tour and an increase in ships docking at the port,” Haynes pointed out.
While he said activity would be supported by the thrust towards Barbados emerging as a hub for medical education, the Governor admitted that the need to sustain the fiscal consolidation effort could continue to dampen economic activity.
With several projects in the tourism, healthcare and distribution sectors scheduled to begin this year, Haynes said the commencement dates of those projects would influence the degree of expansion in the economy.
The Governor also revealed that the island’s foreign reserves continued to prosper and had increased by $576.3 million to $1.05 billion at the end of 2018, approximately 13.5 weeks of import cover.
He said the implementation of the Barbados Economic Recovery and Transformation (BERT) programme so far shown positive signs.
“So far progress has been encouraging and obviously what stands out is where we are in terms of our international reserves, both in gross terms and net terms . . . . We’ve seen a significant improvement in the fiscal performance and with the debt restructuring we have been able to bring the debt down and that I think is within the program’s limits,” Haynes said.
The Central Bank Governor noted that construction fell by an estimated seven per cent during the review period and activity in the other non-traded sectors including distribution, business and other services and transportation, storage and communication also declined.
Electricity consumption was flat, with homes and businesses increasing their reliance on solar power electricity generation.
The average unemployment rate for the four quarters ending September was 9.2 per cent, compared to 10.2 per cent in 2017.
However, Haynes said that figure was expected to rise as a result of layoffs in the public sector.
Public finances between April and December 2018 improved significantly due to the reduced interest costs associated with the suspension of commercial external debt payments and the lower interest rates on domestic Government securities.
Haynes said the government was still in the process of renegotiating with external creditors, to whom payments were suspended on June 1, 2018.
“It’s a process and we are negotiating in good faith with the external creditors and we hope to be able to arrive at a consensual position as soon as possible. We have to go through the process to make sure everyone is aligned and they understand our issues and we understand their issues and we are able to come to a position which ultimately will redound to the benefit of the Barbadian economy,” he said.
According to the Governor, revenues were $56 million below the target due to larger than anticipated tax refunds. Government provided $54 million in income tax and $18 million in value-added-tax.
The new fuel tax also realized $35 million during that period.
In his closing comments, Haynes said it would take a full-fledged effort from everyone involved to rescue the island’s economy.
“The road remains challenging. We’re not yet out of the woods. We’re making good progress but we have to keep focused and work together in order to achieve the objectives that we have set.
“Certainly from the bank’s perspective we believe that our objectives are achievable, but it requires everyone to put their hand to the plough in order for us to get where we want to get and that this time next year we will feel that we are in a much more comfortable position,” Governor Haynes concluded.
john??????
0.6% according to you at the end of 3rd quarter this would mean that the 4th quarter did better than expected
So owen was right all along,no growth.
Fake news.
who ever forecasted any growth for 2018? everyone I know predicted no growth, not just owen
yuh real fake fuh trute.
Bottom line folks, get suspenders ‘cause the belt can’t pull any tighter. Increased taxation on it’s way. Tourism, healthcare, construction, distribution etc are all mentioned as areas that can help the economy grow, but not a word about agriculture. Our food import costs continue to be enormous and we are exporting little. As the old saying goes, if my outgoing exceeds my income then my upkeep will become my downfall.
@Breadfruit
You are correct. The economy was expected to continue on a downward slide for the duration of 2018. It contracted 0.7% at March, 0.6% at June, 0.5% at September and 0.6% at December. The average rate of growth for past 10 years was -0.7%.
Governor Cleviston Haynes projected last September that “the Bank now expects negative growth of 0.25 to 0.75 per cent for 2018. Output in 2019 is forecast to be in the range of 0.5 per cent to one per cent”.
The new Administration had to first act with urgency to stop the hemorrhaging of the foreign reserves which was down to six weeks of import cover, and was staring devaluation in the face with the upcoming Credit Suisse loan due and import bills to pay. Suspension of the foreign commercial debt was the best alternative to halt the forex slide and avert a Venezuela-type crisis. Successfully renegotiating the external debt will be crucial in the next few months.
On the other hand, action had to be taken to slow the out-of-control current account debt which stood at around 170% of GDP — an unsustainable position and the third highest in the world. Spending cuts have already begun to bring the debt down and more efficient tax measures have started to close the fiscal gap. Restructuring of the local debt has saved approximately $500 million per year and resulted in the first credit rating upgrades in a decade. Restructuring inefficient and loss-making State-Owned Enterprises will take tremendous financial pressure off public finances.
As the Governor mentioned, we are “not yet out of the woods” and it will take a Herculean effort to repair 10 years and 90 days of damage. Barbados is headed in the right direction to stabilize the economy and return it to a growth path in the medium- to long-term.
Voodoo economics drafted by Clyde Ma-as-cold and his piers, to inflict pain on use bajans. They claim possession of the best brains in Barbados.
well some of us already figure that out but the diehards will keep the blame game rolling.
Mia will soon officially put Dr.Kevin Greenidge of IMF fame, to breath down the Governor’s neck as a consultant. She wants to appoint her own Governor.
The reported comments yesterday by the Governor of the Central Bank of Barbados that the country politically economically financially is not out of woods is clearly in stark contrast with the reported declaration last year
by the Prime Minister that the country is back on track and punching above its weight.
So, notwithstanding
the very inhuman and harsh austerity measures for the last 7 months of this already failed,
reckless and incompetent BLP
government, the country has been viewed as not yet out of the woods.
What a tremendous shame!!
Also, going through the Barbados Today
news story – it is gleaned by me from reading it that the
Governor
has painted a bleak outlook for growth in the political
economy of Barbados for the near future.
Indeed, this
contradicts the position of the Prime Minister that the
establishment of
Ross University, the Barbados leg of the current English tour,
are growth factors for the overall national political
economy.
What a tremendous shame!!
Meanwhile, the Governor points out
that tourism,
construction,
distribution, business and other services and transportation, storage,
communication fell.
As well, it must be noted that the Governor did not point to any possible
strategies
whatsoever in the review by this
already failed, reckless and incompetent BLP government for the
further growth and development of the
material production and distribution sectors of this country.
Surely, this visionless clueless BLP MUST GO!!
“”The Governor also revealed that the island’s foreign reserves continued to prosper and had increased by $576.3 million to $1.05 billion at the end of 2018, approximately 13.5 weeks of import cover.””
BLACK BARBADIANS must learn not to copy the bad habits of the minority races in Barbados.
That statement he made is a most IMMORAL statement.
Barbados’ foreign exchange reserves is bolstered by BORROWING, thus making our situation worse not better. Mia has defaulted on our foreign debt obligation, Mia has taken treasury bills and changed them to long term debt, forcing 80 year old pensioners to accept that they will not get any money for FIFTEEN YEARS,
The country’s debt is now greater than before.
This is nothing to boast about. All that is happening is the she and the Central Bank Gov. are now fooling Bajans that all is rosy which is far from the truth.
The only people who will benefit will be the WHITE BAJAN AND INDIAN MUSLIMS controlled Barbados private sector who now have lashings of so-called foreign exchange to lick out. These perpetual BUY AND SELL ARTISTS, GLORIFIED SHOP KEEPERS must be licking their chops while listening to the Gov. AND HIS VOODOO ECONOMICS.
Mr. Central Bank Governor tell me, if we take away all the borrowed money over the last few months, if we reverse the decision to default on our national debt and dont pay any creditors a single cent, if we return the money we are stealing from 80 year old pensioners, where would our economy be???
Would the private sector of Barbados which uses loads and loads of foreign exchange have earned enough foreign exchange for you to boast that the country has 13 weeks of import cover??
If you cant, then there is your problem right there.
I really cant stand CARSON C CADOGAN…..An ex-DLP Minister who had his hands well in the cookie jar….selling houses and permits !! And helped to get Bim in this crisis and does nothing but to slander the current administration and when HE had his chance all he did was think about SELF !! You helped us into this mess and are doing nothing to keep us out but the blame but without looking at SELF and your efforts to do exactly what the BLP is doing currently…..Fool who you can fool ! A*shole !
Get the fat cats to empty their offshore accounts and put the money back where it came from in the first place and watch Barbados grow.
Agreed…..HEATHER THOMPSON
They need money, right….well they know where to go and get it and stop taxing the poor people who had no say in their “wheeling and dealing”.
Bim has NO RIGHT being in the state it is in. And the buck stops at the Bs and Ds who are RICH after the reign as MPs.
They want the ppl to listen to them, well they need to listen to the ppl….those that voted you in to do a Job NOT just to create tax, after tax, after tax….That is not your only role !!
Update laws, enforce laws, clean up the Judicial system to cater for the poor, change the education system its outdated and embrace new ideas. How about more free TV channels that show interesting and updated programmes instead of boring and outdated CBC.
Geese, when do they ever think about poor people…All I can see is the tourists, business ppl and foreigners come here and are treated better than the locals. A strange set-up to me !!