EDITORIAL: Recovery key
Governor of the Central Bank of Barbados, Cleviston Haynes, recently noted that the COVID-19 pandemic has exposed the country’s vulnerability to severe economic shocks and it is testing our resilience.
He was at the time delivering the Central Bank of Barbados’ review of the country’s economic performance for the first six months of 2020, whilst giving an outlook for the remainder of the year.
The Governor pointed out that in his initial briefing for the first quarter of the year, he did caution that the COVID-19 pandemic had so altered the global economic outlook, that the Barbados economy faced the prospect of a double-digit decline in economic activity in 2020. Further, he said during the April to June quarter, the impact of COVID-19 spread across the Barbadian economic landscape and the virtual cessation of activity in the tourism sector, combined with curfews and temporary closures, deepened the initial contraction that was realised during the first three months of the year.
He also revealed that preliminary data suggests that economic output fell by 27 per cent in the second quarter, resulting in an overall decline of almost 15 per cent over the first six months of 2020. Layoffs in the tourism and restaurant industries were therefore accompanied by additional job losses in other sectors, which experienced diminished cash flows. As a result, unemployment insurance claims between March and the end of June surged to in excess of over 33 000.
Looking to the recovery aspect, Haynes stressed that revitalising economic activity is crucial to the well-being of the country and indeed, this is key. He however said that a speedy turnaround hinges on several factors, including the pace of the global economic recovery, our ability to safeguard the health of our firms during this period, our ability to implement reforms that enhance business facilitation and enable swift project execution. Also, our ability to attract and jump-start investment projects that will create jobs, boost economic activity and earn or save foreign exchange. All these remain critical to our recovery.
Indeed, this is what we need now to focus on – our recovery efforts. What exactly we can do to fight back against what COVID-19 has taken away from us. This is the time as well to foster a greater level of entrepreneurship amongst our people, so they can produce quality local products, even some for export. Yes, we may need some level of investment or financial injection for this, but from what we have learnt, we cannot rely on just one main sector to draw foreign exchange for us. Now that tourism is struggling to rise again, the time has come for us to diversify our product offerings, build out other sectors and remember not to once again put all of our eggs in one basket.
We should also listen to suggestions from the Caribbean Development Bank (CDB), asking that regional governments, including Barbados, fortify their health care systems and do more to push private sector development, given that economic activity across the region has virtually collapsed. The Bank has noted that
increased emphasis must be placed on promoting private sector development and new sources to earn foreign exchange by, for example, “diversifying the economic base and strengthening the regulatory and institutional framework.”
The pace of recovery may be slow, but a plan in hand is key if we are to recover.