The Governor of the Central Bank of Barbados Mr Cleviston Haynes has delivered some of the best news we have heard on the Barbados economy for some time.
Burdened by all the depressing reports of rising unemployment, business disruptions and closures, COVID-19 infections, and the debate over mandatory vaccinations, it may have been overlooked that the island’s economy had registered growth.
The skeptics may remark that after more than a year in recession, there was no where to go but up, especially after the island was placed on the coveted “green list” by our most important tourism market – the United Kingdom (UK).
However, with unemployment, particularly in the tourism and hospitality-connected services sector at record high levels, news that the sector was on the rebound is reason to be optimistic.
The COVID-19 pandemic, we know, represents a clear and present danger not only to our collective health but to the sustainability of our economy.
As a result, our ability to keep the disease at bay, increase the level of vaccinations to achieve herd immunity, and to halt as many cases of the illness and variants as possible from entering through our ports by visitors and from Barbadians who travel, will be key.
In his economic review for the first half of 2021, Governor Haynes lamented the economy remained restrained by the “protracted global presence” of the COVID-19 pandemic. Moreover, he pointed to the uncertainty it was creating in our main source markets such as the United States and the UK, and this situation could make or break any expected recovery process for us.
For those who are unemployed, under-employed or struggling to maintain their small businesses, the report of 5.5 per cent growth during the second quarter of year, may question how much of that activity is trickling down to them.
The fact is that economic activity has contracted so much over the past 12 to 18 months, it will obviously take some time for significant economic activity to be fully represented in all sectors.
A casual drive through Bridgetown on Saturday will reflect just how poorly retail activity is performing. Just days before what should have been the climax to our biggest national festival – Crop Over, The City is nearly a ghost town.
Under normal circumstances, Bridgetown and other shopping centres around the island would be teeming with activity. Hair salons and nail technicians would be booked to capacity and entertainment venues prepping for last lap fetes and limes.
All this would have not only brought joy to enterprises and their clients, but it would have provided a needed economic boost during the slow summer season for the tourism and accommodation sector.
The Central Bank boss, in his report to the country yesterday, pointed to the continued depressed state of tourism over the first half of the year.
Again, the COVID-19 virus created a pall over every sector. “Rising cases of the highly contagious Delta variant of COVID-19, coupled with on-going uncertainty as it relates to travel protocols, served to temper the budding recovery”, we were told.
The much-vaunted Welcome Stamp, Mr Haynes revealed, continued to attract new remote workers, and this contributed to economic activity, not only from the millions of dollars in fees, but through real estate rentals and spending by their digital nomads on ancillary services.
Given the increased importance of the ‘Welcome Stampers’ it is imperative that policy makers pay much greater attention to servicing the needs of these new residents.
The recent negative publicity from one of the early proponents of the programme who blogged about her frightening experience with sexual harassment as a single woman, should serve as a wake-up call.
In an age of instant news, widespread use of various forms of social media we run the real risk of undermining an important source of economic activity. Just as millions around the world learned of the initiative, they will equally be informed of bad news from those who relocated to Barbados.
One area of the Governor’s review that stood out was the issue of price increases. The matter of petroleum prices and the cost of food are major bugbears for Barbadians.
With so many families hurting as a result of high unemployment, and many households operating on reduced incomes, their sensitivity to price movements will be evident.
On the macro side, we are concerned by the deterioration in our debt situation which was heading in the right direction in the pre-COVID period. One cannot fault the administration terribly given continued the need to respond to the pandemic.
The $13 billion in debt as at June 30 which represents 150 per cent of GDP needs to be monitored very closely.
We are banking on the realisation of Governor Haynes’ forecast for between 1.0 to 3.0 per cent growth by year-end.
It is agreed that the speed of this country’s recovery will be tied to the recovery of tourism, which hinges on what progress we make in the fight against COVID-19.