Forte: Figures not painting real picture of economy

Canada-based Barbadian economist Carlos Forte isn’t buying the Central Bank of Barbados’ glowing reviews of Barbados’ economic performance in 2023, questioning official figures which he said don’t represent the nation’s true economic health.

Forte, the Senior Economic Policy Advisor in the Canadian province of Ontario’s Ministry of Infrastructure, said the performance of the economy, reported by Governor of the Central Bank Dr Kevin Greenidge, had been blown out of proportion.

“The economy is not performing as well as the official figures would suggest,” Forte told Barbados TODAY.

Dr Greenidge declared the economy was back to pre-pandemic performance, having grown by 4.4 per cent to an unmatched value of $12.8 billion. As 2023 marked two years of solid growth and was another year of a strong showing by main breadwinner tourism, the governor predicted a repeat of this level of expansion in 2024.

But Forte is adamant that while the economy expanded last year, it did not do so by as much as reported.

From Toronto, he told Barbados TODAY: “There are some serious question marks over the official figures for inflation and the official figures for economic growth. The latter is a derivative of the former. It is very clear, in my view…the high prices over the course of the last two years…. You can appreciate that those prices are higher, there is an array of direct taxes like duties at the port…. The prices go up even without the rate being changed; the revenue take would be higher.

“They have also inflated the size of the economy because it is measured in dollars. So, if the price levels are rising, your resulting non-GDP numbers would be higher even though production or output has markedly increased. So, I am not saying that production hasn’t increased, but my contention is that it has not to the extent that the Central Bank is reporting.

”So, do I believe that the economy has grown by 4.4 per cent last year? No, I do not. Nevertheless, I am not pretending to be less than charitable.”

Forte contended that the Mottley administration has chosen to ignore the price effects to create a “rosier picture that they can report to the public”. He suggested the higher prices not only triggered an increase in the nominal gross domestic product but also inflated real GDP.

Forte added: “If you take a look at the appendix 6 of the same Central Bank report which has the actual absolute numbers, you will see that the foreign debt [in] December 2023, [is] almost twice as large as it was in fiscal year 2017/2018. I believe that that is not an accident, because economists besides myself have drawn attention to the fact that the government has been, over the last five years, relying more on foreign debt than domestic debt, and the foreign debt has been growing at quite a pretty sharp pace, which could have very serious implication 10, 15, 20 years down the road.”

The senior economist suggested that this is so because of what he argued, is a persistent challenge the country has had over the years earning foreign exchange.

He acknowledged that the Barbadian economy is growing but preferred to support fellow economist Professor [Justin] Robinson’s more modest assessment that the economic situation has stabilised and public finances are in reasonably good shape.

When contacted by Barbados TODAY, Central Bank Governor Kevin Greenidge said the institution was standing by its report.

emmanueljoseph@barbadostoday.bb