Positive trend in Barbados economy

“Overall a positive outcome, bumps along the road to get over, but Barbados continues along the right path.” 

This was the upbeat assessment of Caribbean economist Marla Dukharan as she reacted to Governor of the Central Bank of Barbados, Cleviston Haynes’ report that the local economy posted 10 per cent Gross Domestic Product (GDP) growth for 2022.

She was, however, mindful that economic performance had not yet touched levels registered before the COVID-19 pandemic struck, that there was a slight falloff in international reserves and import cover, and that the strong rebound in tourism still needed to translate into higher net inflows of United States (US) Dollars. 

“Seven consecutive quarters of positive year over year real economic expansion and 10 per cent real GDP growth is welcomed and positive indeed. Relative to others in the region, [it] is quite robust,” she stated in an interview with CBC News. 

She said she was hopeful that the Barbados economy would rebound to pre-pandemic levels of outturn over the next 12 to 24 months.

“But the outlook for Barbados’ growth this year and next is slower than the 10 per cent we saw last year, and the global economy is basically in recession mode overall. So the outlook is tepid at best,” reasoned the outspoken economist, famous for championing the interests of the Caribbean internationally.

At a time when many oppose Government borrowing, she noted that borrowing had, in fact, kept international reserves and import cover to desired levels.

Ms. Dukharan pointed out, “The fact that international reserves and import cover have fallen is of concern, as this metric has been propped up by borrowing in the past couple years.”

And she blamed “a structural problem plaguing many Caribbean nations, not just Barbados”, for substantial tourism activity not redounding to higher net inflows of US Dollars, and recommended slashing food imports as one of the fixes.

“Strengthening domestic linkages to agriculture and manufacturing is important, and importing less food and fuel while producing it locally is the solution. We have to get more serious about that. We are at 62 per cent of 2019 levels of tourist arrivals in 2022 overall, 78 per cent in December alone, [which] are again all promising indicators, especially given the economic decline we see in the United Kingdom,” she observed. 

Plus, the economist applauded Government’s near goal of achieving a primary fiscal surplus, calling it “positive and important”. 

“A primary fiscal deficit means that the Government was basically borrowing to service the interest on its existing debt. A primary fiscal surplus means that the Government is no longer borrowing to service the interest on its existing debt and that the debt level, therefore, is now more sustainable, relative to the fiscal revenue and expenditure levels,” Ms. Dukharan explained. (SNR)

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