EDITORIAL: Towards economic growth
ONE issue that Barbadians will want to see develop is how growth in the economy will be realized this year, if that is likely to happen. Barbados needs to grow its economy in order to recover from the slump that the country has experienced over the course of the last several years. Improved economic growth also raises the possibility for jobs and other benefits to Barbadians so that in the long run they are better off.
Last week the Prime Minister, the Hon. Mia Amor Mottley, said that with the economy having been stabilized, attention will focus on growth, with International Business likely to fuel it along with Tourism, which is the island’s leading economic sector. By stabilization it is assumed she meant that measures put in place through an International Monetary Fund (IMF) programme, debt restructuring, and fiscal consolidation, have brought about some improvements.
Before the Prime Minister’s comments at a Cidel Bank and Trust 20th anniversary function, the Governor of the Central Bank of Barbados, Cleviston Haynes, had given his thoughts on the performance of the economy and the economic outlook for 2019. He is reported as telling the media that economic activity remained sluggish in 2018 and that the measures carried out under the IMF programme “contributed to an improvement in the public finances and the stock of international reserves”.
While we would agree that certain economic fundamentals have started to show some improvements and raise expectations that Barbados will eventually turn the corner, a lot more still has to be done in order to aim for sustainable economic activity. Governor Haynes said that Barbados’ external debt suspension has helped to shore up the reserves and the completion of the debt restructuring remains important to the overall stabilization efforts. So economic growth in 2019 will depend on a whole set of variables including, as he put it, the efficient and timely execution of reforms which must include reforms of State-Owned Enterprises (SOEs), meeting IMF performance targets, more fiscal consolidation measures and executing several of the construction projects earmarked for this year.
Since last year the economy has been in recession. 2018 ended with a decline of 0.6 per cent when compared to the one per cent growth in 2017. Therefore for 2019 the Governor remarked that while revitalizing growth is critical, the forecast for it is to be flat. Tourism is expected “to perform favourably”, and such activity will be supported by the thrust towards medical education. What seems worrying is that there appears to be no room for agriculture and manufacturing in the growth projections. Some priority must be given to these two sectors in our economy to make for a more rounded performance of the economy if we are to earn/save foreign exchange where necessary and give support to the number of Barbadians who have lost their jobs and are now turning to agriculture as an area to find employment while contributing to the efforts to improve local food production.
Economic growth in Barbados is the result of trade in both tourism services and goods, and the investment in capital stock. There must be a stable macroeconomic environment, stable balance of payments position, low inflation and low interest rates as accompanying factors.
We hope that the situation will improve for the country and its citizens.