Filtering Truth From Fact About The Performance Of The Barbados Economy

Governor of the Central Bank Dr. Delisle Worrell

The International Monetary Fund (IMF) recently released a statement on the Barbados economy which has caused some Barbadians to sigh with relief. Central Bank Governor Delisle Worrell was also also full of glad tiding in April when he forecast the economy to grow 2% during his Review of Barbados’ Economy for the First Three Months of 2011. Why is BU not as optimistic?

Is it not ironic suggesting growth for an economy which relies heavily on that of the United States? The US legislature is currently debating whether to raise its debt ceiling to 16 trillion dollars!   Following close behind the US is the UK government  who has committed to cut 600,000 government workers over a three year period. How can we be so confident about growth when the two main markets we rely on for inflows of tourist, foreign direct investment and remittances continue to struggle? What growth the US has managed to achieve in the last year is what the economists refer to as jobless growth.

Given the prevailing economic uncertainty one might have reasonably expected our intellectual cadre of professors at Cave Hill,  to have come to the assistance of ordinary Barbadians, and provide an unbiased and reasoned interventions to demystify the economic gobbledygook we are being fed. No such luck. Instead what we have had to ‘processed’ is an attack on the credibility of the information presented by the Central Bank of Barbados in its periodic updates  to the nation. The Central Bank of Barbados has always held the respect of both sides of the political spectrum in Barbados. This is our first recollection of any Governor of the Central Bank attracting the kind of attack delivered with the fierceness as we are witnessing from former Prime Minister and Leader of the Opposition Owen Arthur and former Central Banker, economist and Arthur’ s right hand man Clyde Mascoll. They have both vehemently dismissed the view posited by Governor Worrell that the economy has grown.

At the crux of the puzzle if you follow  BU’s layman interpretation:

If nominal GDP (gross domestic product (GDP) figure that has not been adjusted for inflation) fell in 2010, and if prices were rising it means that real economic growth also fell. Against the foregoing how is it Barbados can report economic growth? In January when the government reported 0.3% growth that was based on an estimate. To be honest BU has become irritated at the carving up of the statistics and analysis to obfuscate ordinary public. What about the intelligentsia on Cave Hill? Had a peek at the Barbados Economic Society blog to make sure we had not missed any elucidation on the mystery of Barbados’ economic performance in the first three months of 2011.

BU will leave it up to the economic gurus to bang each other on the heads about who is right or wrong about the numbers. Here is what we know. If there has been some manufactured easing of the global economic conditions then it stands to reason that Barbados will benefit from a few more tourists visiting the island, increase in FDI and remittance inflows because a few more people feel a little more confident. Does it mean however that our debt to GDP ratio does not remain North of 100? Does it not mean that we are spending more than we are earning on Current Account? Does it not mean that we are flogging the same economic fundamentals which have served us well for the last 30-40 years? What is the status of our renewable energy program? On a related note it is ironic that President Barack ‘Clean Energy’ Obama gave the approval last week to ‘drill baby drill’ in Alaska and the Gulf.

There are facts and then there is the truth. To sensible Barbadians the truth is how long we can continue to withstand the boom and bust cycles which are approaching of late with increasing frequency. Wholly dependent on a fossil based economy in times when cheap oil is a thing of the past. We are given to understand we are at the tail end of the last recession described as the worst since the Great Depression. It has destroyed the wealth of developed nations and heaped more debt on developing nations. Developing nations have no choice but to turn cap in hand to the IMF, World Bank, IADB and other international financial institutions; all controlled by the developed world.

While our economists argue about whether we have nominal or 2% growth, it seems to pale in insignificance when we view the big picture.

126 thoughts on “Filtering Truth From Fact About The Performance Of The Barbados Economy

  1. looking glass is entitled to his views; but the proof of the pudding is in the eating and owen arthur did what he was supposed to do during his fourteen years in office and he did it well. he took a bewidered country with a battered economy and allowed me and barbadians generally to enjoy a peaceful and prosperous life for the last fourteen years. no layoffs, no rejection of the barbados dollar by our caricom neighbours, no loss of severance, restoration of the 8%cut which would have enhanced the pension of public servants; giving unestablished workers pensionable status; expansion of the airport and seaport; expansion of the highway; reverse tax credits for persons in the lower income bracketand i could go on and on. i am sorry to have to sing the tune of the blp but there must be balance in our presentations. he lost the elections due to some splendid electioneering by the dlp buttressed by the eloquence of the late prime minister in questioning the integrity of mr arthur. we were promised better. the question to the non-partisan is are we better off? speculation is rife as to whether he would have been able to manage the economy as well under the current economic climate. i am of the view that having done it before ; he could have done it again and even better because he had the track record. the charges of corruption and the blp led against mr artur on the platform and which propelled the dlp to victory should be brought to light and let the chips fall where they must. i think that mr arthur’s greatest disservice to the people of barbados would be the destruction he has wrought on a party which lifted him from the bottom of the pork barrel; but in my view he did manage barbados well.

  2. @Straightalk and david
    That idea could be fleshed out further with focus on Medical services to the retired and Medical Tourism. Medicine would bring in alot of $$$$$ quickly if organised properly. Bim being small must always think in terms of maximum profit / sq ft utilised.

    Owen was good in many ways but never forget that Bim and most Western Countries benefitted from the RIDICULOUS EXPLOSION in money creation. That is why we are in the midst of a very serious financial CRUNCH which will take at least 5-7 yrs longer. Be very careful as the US$ could be headed MUCH LOWER and hyper-inflation could easily wreak havoc a la Germany in the 1920s, Brazil/ Argentina in the 1970-80s and Zimbabwe more recently. Indeed I possess a Zim ONE HUNDRED TRILLION $ Banknote, very legit.
    Protect yourself with Gold/ Silver ie real money or other items that can hold value like agri commodities etc

  3. @Moneybrain

    Banks in BIM make alot of money by taking advantage of peoples limited investment options, they hold overseas drafts for 30-45 days routinely etc. Banks should avoid firing good workers in keeping with what should amount to a social contract with the citizens of Bdos based on profits and accepted business practice on the island.
    Banks do hold funds on drafts even when they are issued by their own overseas branches for an inordinately long time. I know someone who has a fairly substantial balance in their account and the banks still hold funds for 30 days etc. although their balance far exceeds the value of the draft. In this day of modern communications there are many avenues that the branch could explore to verify the authenticity of the instrument. In some ways banking in Barbados is stuck in the 60’s.

    I agree with your comment re the social contract but you must remember that the Big 3 Scotia,RBC & FCIB have their HQ’s in Canada although regional HQs may be in B’dos. Policy directives are issued by HQ to mirror what happens in Toronto and local conditions may not be taken into consideration when it comes to layoffs. In Toronto a laid off bank worker could reinvent himself and perform many different roles while opportunities in B’dos are somewhat limited.

  4. To be fair to the Financial Institutions I should have pointed out that some of the workers who lose their jobs are older workers who accept “retirement packages” and the younger members of the workforce get to keep their jobs

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