BRIDGETOWN, Barbados (CMC) — The global economic crisis is slowing the inflows of foreign exchange into Barbados and as a result the island recorded economic growth of less than one per cent, according to figures released today by the Central Bank of Barbados (CBB).
It said the global environment continues to constrain prospects for a vigorous economic recovery, as the poor economic performances of the United Kingdom and the United States continue to depress the demand for Barbados’ tourism services.
However, modest gains are expected from the gradual improvement in length-of-stay. Private investments in tourism-related projects and corporate building activity are anticipated to further expand construction output for the remainder of 2012.
“However, foreign exchange sectors are not projected to grow significantly in 2012,” the CBB said, adding that overall growth is forecasted to be in the region of one per cent in 2012 and that no significant employment gains are expected.
It said that private investment should strengthen, supported by government’s initiatives, laying the foundation for future growth.
The CBB said that Barbados’ foreign exchange reserves at the end of June stood at BDS$1.3 billion (US$650 million), a decline of BDS$63 million (US$31.5 million) since December 2011.
“This level of reserves is no lower than the amount recorded at the end of 2008, the year the industrial economies fell into the worst recession in recorded memory. As expected, the international recession has slowed the inflows of foreign exchange to Barbados, and has therefore limited the prospects for growth in an economy which needs foreign exchange in order to register sustainable growth,” the CBB said.
It noted also that the recession in the industrial world has been compounded by the European economic and financial crisis, further containing foreign investment in emerging economies like Barbados.
“As a result, real growth in the first half of the year was estimated at 0.6 per cent.”
The CBB said that output in the tourism sector rose by 1.8 per cent in the first half of the year with the largest contributor coming from the Caribbean Community (CARICOM) region, Trinidad and Tobago, where arrivals grew by 35 per cent.
It said that arrivals fell 1.5 per cent over the five-month period ending May, but there was a 6.4 per cent increase in the average length-of-stay.
Visitor numbers from Canada were up three per cent but arrivals from the United Kingdom and the United States markets fell by 10 and four per cent respectively. Cruise arrivals increased by 2.5 per cent, even though 21 fewer cruise calls were made.
There was stability in the length-of-stay of visitors from the US, UK and Canadian markets, with slight growth in the length-of-stay of tourists from Trinidad and Tobago and other CARICOM countries,” the CBB said.
Inflation appears to have decelerated slightly, with the projected 12-month average rate to June at about 8.6 per cent, compared to 9.5 per cent in December. Inflation in the prices of food and fuel appears to have abated, since the last quarter of 2011.
In addition to the job loss in tourism, there was also some retrenchment in the manufacturing sector and non-sugar agriculture, resulting in an unemployment rate estimated at 11.8 per cent at the end of March 2012, compared with an average of 11.2 per cent for all of 2011.
The CBB said that the island’s fiscal deficit was estimated at 5.1 percent of gross domestic product (GDP) for the first three months of the 2012/13 fiscal year.