Jan 2012 Financial News

Barbados records ‘marginal’ growth

Jan 18, 2012

THE Barbadian economy has recorded marginal growth for the second consecutive year after declining in 2009.

This along with comfortable levels of foreign reserves boosted by a steady flow of capital some inflows, and a lower fiscal deficit between April and December last year, were some of the high points of the economy in 2011.

However, both unemployment and prices were higher.

In its review, the Central Bank of Barbados revealed yesterday that the economy remained stable in a climate of undiminished international economic uncertainty.

Governor Dr. Delisle Worrell said that there was growth of 0.5 per cent. This compared to about 0.3 per cent for 2010.

He said also that while tourism numbers have increased last year, both length of stay and spending were down “leading to an increase in tourism output that was marginal, at 0.3 per cent.”

He said that apart from tourism, “the growth sectors were construction (4.4 per cent) and transport and communications (0.6 per cent)”.

“Output contracted in manufacturing, sugar and non-sugar agriculture. In contrast the number of licensed International Business and financial Services Companies increased by approximately 3.8 per cent,” he pointed out.

Over the past decade, Barbados was able to maintain its share of expenditure in the Caribbean tourism market by virtue of its competitive edge in the top end of the market. There was no significant expansion in the International Business and Financial Services sector, or in exports, and the public sector was constrained in stimulating the economy by the need for fiscal consolidation.

However, the Governor said though that Foreign exchange spending of $5.5 billion was financed almost entirely from tourist inflows, earnings from the International Business and Financial Services (IBFS) sector, exports and capital inflows.

“As a result there was a minimal need to draw on the Central Bank’s foreign exchange reserves, which fell by only one per cent between the end of 2010 and December 2011,” according to him.

“The Barbados currency remains well protected, with foreign reserve cover of 18 weeks of imports at December 2011, comfortably above the international norm of 12 weeks,” he stated.

The Governor stated that the lingering effects of the international recession have dried up business cash flow and reduced profitability, leading to additional job losses.

“Consequently, the average unemployment rate for 2011 is estimated at about 12 per cent. The sectors mainly affected were manufacturing and small business,” he said.

High oil and commodity prices continued to drive up inflation which reached 8.7 per cent in October.


Source;
Barbados Advocate
Wednesday January 18, 2012

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=22195