recipe for growth

IF Barbados wants to grow its economy beyond one per cent, then there are certain policies that must be pursued in order to achieve this goal.

Dr. Justin Ram, Director of Economics at the Caribbean Development Bank (CDB), noted that there are some things the authorities here can do to lift economic expansion.

He told a news conference that firstly, the government has to examine and bring under control the cost of debt.

The Director said the interest rate on that debt is too high and overall debt management must be dealt with.

In addition, the country has to tackle high transfers and subsidies, and reform the state- owned enterprises.

“The Government needs to make the Barbados economy a lot more competitive and productive...and to focus its social investment towards those who need it,” he advised, while also suggesting that a focus needs to be placed on improving the country’s infrastructure, including the sewerage system.

Last year the Barbados economy grew one per cent and while the island’s central bank is forecasting similar growth in 2018, the CDB thinks that growth will be about 0.7 per cent.

The CDB is projecting regional economic growth of two per cent in 2018. This follows a return to positive figures last year, during which the Region experienced overall growth of 0.6 per cent despite the devastation caused by the Atlantic Hurricane Season.

Dr. Ram, says that all of CDB’s Borrowing Member Countries (BMCs) are expected to contribute to the positive movement.

“This is mainly driven by the return to growth in Trinidad and Tobago and a 2.3 per cent uptick in Jamaica, which accounts for about a fifth of regional GDP. The highest growth rates are anticipated for Anguilla and Dominica as they rebuild from the damage caused by the 2017 hurricanes. Antigua and Barbuda and the Turks and Caicos Islands are also expected to have strong growth.”

The Director of Economics said that in order for Caribbean countries to ensure sustainable, inclusive growth and development, measures to improve resilience are needed. During his presentation to media, Dr. Ram recommended a framework that could help countries build resilience. It is built on four pillars: macroeconomic resilience; productivity and competitiveness; human development; and environmental resilience.

“Any blueprint for building resilience in the Caribbean must take into account all of the key elements identified in the four pillars. In addition we must ensure that we consider regional integration and gender equality – cross-cutting themes that support and reinforce the four elements. It is important that we build resilience in all four areas, which are interconnected,” said Dr. Ram.

With respect to specific policy actions, Dr. Ram noted that at the macroeconomic level, fiscal rules that encourage governments to save should be implemented; and debt-to-GDP limits should be introduced. The Director also recommended that countries adopt reforms that make it easier to do business, thus setting the environment for private-sector-led growth. Resilience at the environmental level will mean stricter compliance with stricter building codes, and the development of indemnity insurance markets, he said.

“We believe that all of this can be strengthened if there is greater gender equality particularly within the labour market. Regional Co-operation will also reinforce this for example, free movement of labour and capital which could assist with overcoming diseconomies of scale associated with small size,” added Dr. Ram.