Jan 2010 Financial News

0.5 per cent growth this year, says PM

Jan 27, 2010

THE BARBADOS economy is likely to grow at a rate of 0.5 per cent this year, while the inflation rate has moderated over the past year.

However, the global economic crisis is estimated to have cost Barbados almost 10.0 percentage points in economic growth over the last two years, says Prime Minister and Minister of Finance David Thompson.

Addressing the Barbados Chamber of Commerce luncheon at Hilton Barbados on Monday, Thompson said projections of the key macroeconomic indicators suggested that in 2010 the Barbados economy was likely to register a marginal growth rate of 0.5 per cent, driven largely by an anticipated improvement in the performance of both the traded and non-traded sectors.

"These projections are in large measure determined by the kind of recovery that will occur in our major source markets.... The global financial markets are showing signs of stabilisation, but one has to be cognisant that this recovery remains still fragile and thus warrants a carefully managed policy response," he warned.

The Prime Minister said he was also happy that the inflation rate had moderated during 2009, falling from 8.6 per cent at the end of 2008 to 3.1 per cent at the end of last year.

He also noted that unemployment had been contained to 10.0 per cent.

Noting, however, that external shocks had posed significant challenges, Thompson reported that GDP growth had stagnated in 2008 while a significant contraction in GDP of about 5.3 per cent was estimated for 2009.

"In essence, the crisis is estimated to have cost Barbados almost 10.0 percentage points in economic growth over the last two years. Moreover, the depth and protracted duration of the crisis has led to broad-based contraction in output across virtually all sectors during 2009," he explained.

The Prime Minister added that preliminary data had shown that the decline in tourism activity was due mainly to an estimated 11.0 per cent fall in long-stay arrivals - in spite of a brighter 6.0 per cent increase in cruise passengers - thereby causing declines in manufacturing and non-sugar agriculture.

In addition, he said, "the crisis-related loss of foreign exchange from tourism is estimated to be $170 million which, coupled with an estimated shortfall of $465 million in private capital net inflows, were the main factors in a lower than anticipated Net International Reserves position".

Mentioning waning tourism-related projects and international conditions that had brought several real estate investment projects to a standstill, he said these had retarded activity in the construction, mining and quarrying sub-sectors.

Other declines were:

- widening of the fiscal deficit in 2009 to $564.6 million or 8.4 per cent of GDP;

- a rise in Government expenditure by 3.4 per cent in 2009, below the 14.1 per cent increase in 2008. (RJ)


Source:
Nation News
Wednesday January 27, 2010

http://www.nationnews.com/news/business/growth-deficits-listed-PM-copy-for-web