Declaring that the 5.5 per cent economic growth for Barbados in the second quarter of this year was no triumph, international economist Carlos Forte has insisted that the economy is still in critical condition and in need of urgent care.
In fact, stating that the Mia Mottley administration was dragging its feet in providing relief to residents, Forte said rising costs and the continued presence of COVID-19 variants are two of the biggest challenges that must be addressed urgently.
He was reacting to the latest economic report in which Central Bank Governor Cleviston Haynes said much of the island’s economic recovery still hinged on the now reviving tourism industry and vaccination of the population.
Haynes also reported that debt continued to rise during the quarter, while government spending increases and revenues fall. International reserves also increased.
Forte said the report came as no surprise to him.
“The persistence of the COVID pandemic, economic false starts and repeated lockdowns continued to wreak havoc on economic and social life in our nation. The hardship that has resulted is palpable and on the current trajectory the prospect of a strong recovery is abysmal. The Barbados economy is in critical condition,” declared Forte.
“The second quarter 5.5 per cent growth . . . is not a triumph. It is indicative of woeful economic underperformance in the wake of an 18 per cent economic contraction last year and a near 20 per cent decline from January to March this year,” he said, adding that economic activity actually contracted by about nine per cent for the first six months of this year, when compared to the same period last year.
“Because the sharp economic decline last year was due to a mandated lockdown of domestic commerce and tourism, an avoidance of lockdowns in 2021 and a safe reopening to tourism would have ushered in double-digit economic growth this year. Economists call this type of growth ‘base effects’, that is, a climb back from a very low base of economic activity,” he further explained.
Forte said the Central Bank report “merely verified that the risks posed to Barbados’ economic recovery by government’s missteps have come home to roost”.
He said that instead of preserving a relatively COVID-free domestic bubble that would have set the stage for a sustained reopening of the local economy and steady arrivals of long-term tourists this year, Government chose to “cast aside common sense and gamble on short-term tourism”.
In fact, Forte told Barbados TODAY that while he understood the Mottley administration’s eagerness to roll out the welcome mat for tourists given that tourism was the lifeblood of the economy, more sound leadership and good judgment are needed.
“It also needs to build resilience through e-commerce, technology, remote work and a roadmap for achieving economic diversification. A judicious balance between public health and economic endeavours is needed but Government cannot achieve this alone,” he said.
“Fellow Barbadians, a sustained recovery of your jobs and economic endeavours depend on you as much as it depends on the government. A return to the social life that we all hold so dear rests with each and every one of us. Get vaccinated! It will help to end the COVID threat to Barbados.”
Forte acknowledged that economic recovery hinges on keeping the economy open and the resurgence of tourism, but said Government had the task of achieving a delicate balance to ensure that Barbadians are kept safe and are shielded from rising prices as many of them remained unemployed.
The Barbados-born economist, who now resides in Canada, also stressed that the most effective tool for achieving extremely low infection rates and minimizing the risk of COVID-infected individuals getting sick or dying is herd immunity.
However, Forte said he believed Barbadians should still be able to choose if they wanted to take the COVID-19 jab.
“Bajans’ freedom of choice to be vaccinated should be preserved. Where public health officials take a more proactive approach is allaying the fears and anxieties of residents by continuously explaining, in plain language, the pros and cons of getting vaccinated,” he advised.
“Barbados’ economic recovery rests in no small measure on neutralizing the threat of COVID mutations. Once the risks of hospitalization and death posed by COVID become as minor as the health risks associated with dengue or the flu, COVID-19 will no longer be a threat to public health, tourism or the Barbados economy,” he added.
Forte urged Government to move with greater speed in providing an ease to Barbadians to help them better cope.
“Despite its promises, the Mottley administration has so far failed to act decisively to reduce import duties and excise taxes on targeted goods that are the subject of surging prices and shipping costs. Punting to the Social Partnership for months of long talk is an exercise in futility – delay tactics,” he said.
“Price controls won’t fly and neither the private sector nor trade unions sets tax policy. Meanwhile, rising prices are taking a toll on Barbadians and eroding price competitiveness. The horse is starving while the grass is growing.”
Government is yet to announce what price control measures it will put in place to stave off rising commodity prices, and it will take just over a month from now to know whether it will put a policy in place to mandate vaccination and regular testing.