Aug 2016 Financial News

Barbados economy grew by more than one per cent during first half of 2016

Aug 19, 2016

BRIDGETOWN, Barbados (CMC) — The Barbados economy grew by 1.3 per cent over the first six months of this year, compared to virtually no growth a year ago, Finance Minister Chris Sinckler has announced.

Delivering the Financial Statement and Budgetary proposals for 2016 to Parliament late Tuesday, he said the economy registered positive but weak growth in 2015, marking two consecutive years of improved growth.

Sinckler said that the economy grew by 0.8 per cent in real gross domestic product (GDP) last year when compared with 0.3 per cent the previous year.

The Finance Minister said the central bank’s current projection for economic growth in 2016 has been lowered to 1.5 per cent from the earlier forecast of 1.6 per cent, mainly because most major investment projects are behind schedule.

He said for the first half of this year, there was a slight deceleration from the first quarter, mainly on account of unexpected delays in major tourism investment projects. In addition, total tourist arrivals exceeded last year’s high with a five per cent expansion for the first six months of the year.

He told legislators that foreign exchange inflows and outflows during the first six months of the year were in near balance with BDS$3.083 billion (One Barbados dollar =US$0.50 cents) in outflows as against BDS$3.040 billion in inflows.

“This, together with external debt service requirements, resulted in the stock of international reserves falling by BDS$43 million to BDS$884 million, equivalent to 13.6 weeks of imports. This compares with the BDS$84 million decline for the same period last year,” he said.

Sinckler said construction activity is estimated to have expanded by about two per cent when compared to last year, based on available indicators such as imports of construction materials, employment in the sector and construction projects currently underway.

The average unemployment rate for the twelve months ending March 2016 was 10.7 per cent, compared with 12.4 per cent for the 12 months ending March 2015.

The finance minister said there was a three per cent decline in the number of international business and financial services (IBFS) licences granted during the first half of the year.

The number of international banks stood at 28, with six banks having closed operations since the beginning of the year.

Sinckler said that between January and April, exports of bottled and bulk rum grew by 11 per cent and 13 per cent respectively. Bulk rum shipments benefited from a modest increase in regional demand.

He said Government’s requirement for domestic financing was BDS$273 million for April to June. The National Insurance Scheme and the non-commercial bank private sector provided Bds$92 million, leaving a Bds$180 million shortfall.

“However, commercial banks reduced their lending to Government by BDS$120 million, which meant that Government required an additional BDS$301 million from the Central Bank of Barbados. Of this amount, BDS$198 million was drawn from additional deposits which commercial banks placed with the Central Bank during this period.”

Sinckler said the main impact of the recent fall in the value of the pound sterling may well be on the sales of villas and second homes to UK residents, but the growth rate could be higher if investment in tourism and alternative energy can be sped up.

Private investment in hotels and tourism-related activity is expected to be over US$600 million over the course of the next four years. For the 2016-17 fiscal year, public sector investment of BDS$210 million is planned, with BDS$165 million being externally funded, Sinckler added.

Source:
Jamaica Observer
Friday August 19, 2016

http://www.jamaicaobserver.com/business/Barbados-economy-grew-by-more-than-one-per-cent-during-first-half-of-2016_71056