It seems appropriate that we should end 2009 by focusing on the global recession which has decimated the developing economies of the world, Barbados included. The irony of it all is while some have lauded the benefits of globalization and economic partnership agreements; the resulting inter-connectivity of world economies has exposed the vulnerability of such an approach. Continuing the current model will ensure that Barbados and other developing economies will forever be dependent of the economies of the G20. Importantly is the challenge of small states to generate options to grow GDP capacity given our high debt burden. Although a significant percentage of our debt is a result of vision-less regional governments over the years there is the greed of Wall Street which must be factored.
Entering 2010 the challenge for Barbados must be to build a roadmap and find the financial resources to roll out policies and projects which will reposition the economy of Barbados to grow GDP. Some may suggest that a Democratic Labour Party (DLP) government is not suited to manage the economy at this time given its historical focus on rolling out social programs at the expense of fiscal and monetary policies. Time will tell if the experience gained in the 90s would have equipped Prime Minister David Thompson and the new Central Bank Governor Dr. Delisle Worrell to confront the current economic challenges.
GDP GROWTH FORECASTS 2010
US 1.5%
Germany 0.3%
France 0.9%
Italy 0.2%
UK 0.9%
Japan 1.7%
Canada 2.1%
China 9%
India 6.4%
Source: International Monetary Fund
A look at the IMF projections for the major economies of the world supports the view that 2010 will be a challenging year. Although the major economies of the world are projected to move from negative to positive GDP growth, it is worrying that our major source markets for tourists and foreign direct investment are projected to struggle in 2010. It is no secret that in the US and UK economic recovery continues to be threatened by excess inventories especially in housing stock. Until restocking takes hold in the US, UK and Canada major recovery will be elusive and in the process Barbados will remain anxious.
Barbados has demonstrated over the years that we are a resilient people and we will do what is required to sustain the decent standard of living of which we have become accustomed. Unfortunately the current debate by our political leaders does not engender confidence. The unprecedented events of the last 18 months call for unprecedented decision making by our leaders. So far we have had more of the same; not good enough.
Barbadians maybe surprised to learn that St. Kitts and Nevis with a combined square mileage of 101 has exported US41.3 million up to October 2009 to the USA. Barbados by comparison exported US26.2 million dollars in the same period. BU has blogged before about the progressive decision making in many of the smaller Caribbean islands concerning the development of Renewable Energy (RE) programs. The benefits of developing an RE program are many, saving foreign exchange, new employment opportunities, buffer the economy against external shock by weaning from fossil energy, developing a greening policy etc. The government of Barbados task is not easy in the current environment and as it approaches mid-term the public although sympathetic will expect leadership which equates to perceived performance.
Barbadians have been told there are no immediate plans to borrow on the capital markets. There has been no concerted effort to educate Barbadians the need to reshape their consumption behaviour. With foreign direct investment tailing off given the bearish financial markets, the fickle tourism industry not expected to surpass 2008 figures anytime soon there is only pessimism regarding the government’s capacity to grow GDP.
The time has come and almost gone where a national consensus by our political parties on a way forward should have been agreed to. How long will we remain on the ropes? How long will we continue to bury our heads in the sand by resting on laurels?
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