BUSINESS MONDAY: STAMP OF APPROVAL

THE University of the West Indies Professor, Dr. Justin Robinson, is full of praise for the Mia Amor Mottley-led administration for the way it has responded to the COVID-19 pandemic.

Dr. Robinson told the 50th anniversary celebration of the Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL) that he supports the use of countercyclical policies, which the administration has undertaken to keep the economy going in the wake of COVID.

Stating that a large part of the current economic decline in Barbados is artificial, Dr. Robinson maintained that the spending being undertaken by the Government of Barbados is an appropriate response to the current situation. In fact, Dr. Robinson, who heads up the Sagicor Cave Hill School of Business, said that the Barbados response is similar to what other countries, including large ones, are doing.

Those countries, he explained, are engaged in massive fiscal and monetary stimuli to mitigate short- and medium-term damage.

“So I fully support what the Barbados Government is doing,” he said, while referring to the trillions of dollars the USA, Europe and Japan are spending.

He revealed further that once the restrictions from the crisis are lifted, Barbados has an excellent chance of a quick revival. He said that clearly Barbados and the Caribbean are facing an economic crisis of great proportion, and that there is no way to soften that message.

Dr. Robinson compared the present economic difficulties in Barbados to that of the early 1990s where, according to him, a large part of the decline in 2020 is artificial. The UWI official reasoned that in March this year when the Barbados economy dipped three per cent, there was nothing structurally wrong with the economy. On the occasion in March 2020, there was a halt to air travel, and the country was closed down because of COVID 19.

“So there is sufficient potential that when those artificial restrictions are removed, economic growth can rebound quite rapidly,” he told the function.

Using the analogy of a “nasty flu versus another illness like diabetes or cancer”, he reasoned that when someone comes down with the flu that individual is laid up with a range of ailments until the flu passes and the patient is back on his feet, since there was nothing structurally wrong with the individual’s body. But with diabetes and cancer, these things are structural.

The Professor noted however that during the period of the artificial decline, a lot of damage can be done such that when the opportunity to rebound occurs, there is not the capacity to re-emerge.

Noting that some people are questioning the enormous spending which the Government has undertaken, Dr. Robinson pointed out that the natural tendency seems to be that when a country faces an economic crisis the Government should clamp down on spending.

According to him, governments cannot afford to do that since the traditional advice is that you cannot afford to cutback on spending.

He said: “If the Government does not do that, the risk of this artificial crisis is that if we allow enough hotels and businesses and so on to fail in this crisis, and if and when there is an effective COVID-19 vaccine or the resumption of international air travel, then our ability to capitalise on that rebound would have been severely compromised because we would have lost a lot of our productive capacity.

“So the countercyclical response is an entirely appropriate one when you are facing an artificial crisis like the one we are facing,” he remarked.