Economic crisis worse than 9/11, 2008 shocks

The coronavirus pandemic knocked the Barbados economy back 24 years, the Prime Minister’s chief economic advisor, Ambassador Dr Clyde Mascoll, revealed on Friday.

This would mean the economy is worse off now than it was after the 9/11 terrorist attacks in 2001 and the global financial meltdown of 2008. The estimate also places the COVID economic crisis among the handful of major shocks to the economy since independence in 1966, including the 1973 oil crisis, the 1982 global recession and the 1991 depression.

The crisis in tourism and mass unemployment triggered by the lockdowns sent Barbados’ economic output, or Gross Domestic Product, crashing back to its level in 1997, according to Dr Mascoll, who stressed that even before the pandemic hit, very few countries in the region, including Barbados, were achieving economic growth.

He said: “Based on what we are observing in the region we are not achieving the kind of economic growth rates that can allow us to feel good that we are on the path to sustainable development. In fact, COVID has not been kind to the region but even prior to COVID the region has been growing by less than one per cent over the last few years prior to COVID.

“In fact, in 2016 we had 0.3 per cent; 2017 just half of one per cent; 2018, 1.8 per cent and we have seen that as a result of COVID there has been a dramatic decline in our economies. Let me say here that Barbados in 2020 is the same size that it was in world GDP terms as in 1997…24 years ago.”

In the feature address to the Institute of Chartered Accountants of Barbados’ (ICAB) Annual General Conference, he maintained that had it not been for COVID-19, Government would not have been forced to look for almost $100 million to pump into health care.

Dr Mascoll argued that this money could have been utilized to develop other areas in the economy.

He acknowledged that for some time Barbados has had the highest public net GDP ratio in the Caribbean.

He maintained there was a need for the country to have a sustainable public policy framework.

“The thing is we now have to pursue a path that is going to restrain the Government because the Government has to obtain surpluses in order to reverse the debt that we described as 146 per cent of GDP,” he explained.

Dr Mascoll said one of the first things that was required was that public policy focus and measures needed to be sustainable as well.

“In order to make them sustainable we have to achieve growth, in order to have growth we have to do the right things in terms of pointing the essential services that we deliver in a direction that we can achieve the kind of objectives that we set ourselves over the next 12 to 15 years,” he said.

Dr Mascoll said this was necessary regardless of which political party was in power.

He said even though elections were due every five years, there ought not to be any significant deviations from the plans outlined.

Dr Mascoll said: “There may be a change in Government every five years, let’s hope not. The important thing though is to be able to evaluate the resources and to say what kind of rate of growth you can achieve first of all because it does not make sense setting too large a target if the resources you have cannot accommodate that.

“So the question is if there is general agreement across the political class that Barbados or any other country in the region should be on a certain path based on its resources then there cannot be any large departures from that. The question then becomes one of execution.”
randybennett@barbadostoday.bb