Barbados Economic Recovery and the Falling Pound

Benidorm in Spain was a small fishing village, then the big boy’s moved in the Spanish Govt rubbed their hands €€€€€€€€/ now look at it. Barbados a wonderful little golden island in the sun and the big boys are wanting to move in, Gov’t is the $$$$$/ €€€€€€or ££££££so important that you become the concrete Benidorm of the Caribbean, LET US HOPE NOT!Gavin Dawson

There are significant trends unfolding in the global financial markets that will impact Barbados. The perilous condition of the local economy – vulnerable to exogenous shocks –  demands that the government and citizenry demonstrate an alertness to ensure there constructive dialogue. We allow the politicians and talking heads vested in the ‘system’ to lead a narrative that is decoupled from national imperatives.   It explains why we are in the deep hole we find ourselves.

The commitment of successive governments the Barbados dollar pegged to the US dollar  has attracted criticism and support. The decision by the Federal Reserve Chairman to reduced interest rates by 25 basis points will spur the debate.

Of greater concern is the trending of the GBP/USD currency rate.  The currency rate has experienced a 2-year low of 1.21603 as at closed of trading. The political uncertainty in the UK over BREXIT and the flavour of politics practised by new prime minister Boris Johnson could see the pound free fall to a parity with the US dollar. This is what leading market analyst Morgan Stanley and others have speculated.

If the forecast is proved correct the immediate concern for Barbados given how the tourism sector is positioned- it contributes the most to GDP both direct and indirect – should be a matter of concern. In simple terms the average UK tourist travelling to Barbados will see a reduced spending power in such a scenario. The statistics read that the UK tourist spends more and vacations longer than those coming from other countries. There is also the investment factor. The wealthy Brits have always targeted Barbados as a preferred country to invest in a second home especially on the West coast of the island.

Relevant links:

Why is the conversation important some will ask?

If we listen to Prime Minister Mia Mottley and members of her government, Barbados economic recovery and growth plan is being placed mainly on tourism.  Barbadians are being conditioned to expect a hotel corridor to be built along the Bay Street area. With the slide of the pound to USD and UK being our most important tourist and investment market should we have a plan B? The blogmaster recalls when the global economy went south in 2007/8 so too did Cinnamon 88 and the Four Seasons project to cite this example to expose the fickleness of a tourism investment pipeline of 1 billion dollars?

One gets the impression we have hitched our hope of recovery to an economic model whose shelf life has expired.

Thanks to John A for prompting this blog.

206 comments

  • @ David.

    Yes but don’t forget to factor in that if the UK leaves the EU they are also free to now source products they bought under the EU from other sources. So there will be savings there to the UK who can now buy freely from any supplier globally without worrying about membership.

    Plus the UK has £13 billion saved in not having to pay their annual dues to the EU now as well that they can use as they see fit.

    Like

  • @John A

    Did you read the last paragraph of the article?

    See it here to save you the trouble:

    This effect is likely to be small though. First, tariffs on the sort of intermediate goods the UK purchases from the EU (and indeed the rest of the world) already tend to be lower on average than those levied on goods used for final consumption – about 4% on intermediate goods compared with nearly 10% on goods imported for final consumption. These figures would be even lower if we took into account services inputs that essentially attract no tariff. Second, tariff reductions will not prevent the introduction of non-tariff barriers such as customs checks that would follow if the UK left the EU’s customs union and single market. These are especially important considerations for industries that value timeliness and flexibility in their supply chains (such as the car industry), and would be difficult to negotiate away in deals with third countries.

    For your argument to be conclusive we have to see the breakout of intermediate goods imported from subsidiarity companies by those located in the UK.

    Like

  • William Skinner August 5, 2019 7:40 AM
    RE @ Freedom Crier Having stated that socialism is rooted in envy , do you care to state what capitalism is rooted in ?

    You have used Socialism and Reduced it to one word that you stated that I said…You have Asked the Question and Freedom will Give you the Word…Capitalism is Rooted in ‘INCREASE’!

    The Scripture, which Justifies the Commandment to INCREASE, Says, “Be Fruitful and Multiply”. It Does Not Only Mean Having Babies!

    Socialism teaches that wealth should be held in common ownership, controlled by the state. Hence Socialist constant push to have government confiscate ever more income and power.

    By contrast, the Bible teaches that God owns all things and that we’re merely stewards of His creation. When we look at each of the Ten Commandments, we see that they’re directly at odds with Socialism.

    • You shall have no other gods before Me.

    Socialism and its offshoots — Communism, Fascism, Democratic Socialism and National Socialism (Nazism) — Enshrine the state above all other powers. There is no room for God, which is why Socialists are in a permanent war with the church and are bent on creating a faith-free society. Hence Tyranny and Chaos Reigns!

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  • @ Freedom Crier

    Thanks for your response. I gather then that socialism is rooted in envy and capitalism is rooted in increase.
    Since according to you, increase and multiply, is not only biblically ,to be associated with child rearing, we would have to suggest that the socialist doctrine of increasing and multiplying the wealth of all ,within the socio economic condition is in direct concord with your position.
    Apparently you have ,by your reasoning,determined that God is a socialist. You have further revealed that the socialist doctrine is rooted in Christianity.
    Interesting.

    Like

  • @ William Skinner August 5, 2019 12:02 PM

    WHAT PART OF THE TEN COMMANDMENTS DON’T YOU UNDERSTAND?

    Or Do you believe that you should take from the Rich man what is his? Why do you not take it from him personally? Or is it that you really believe that if you take it personally you would get locked up. But if you involve everybody to take it, you could not then be held responsible. But you have made everyone complicit in your Dark Deeds. Leftist always make other people GUILTY of what they want to do. It is Always about avoiding the Consequences and the Method is to get other people to do it for you!

    WAS JESUS A SOCIALIST?

    Did Jesus support Socialism? Do the teachings of Jesus Christ condemn the accumulation of wealth while pushing for the equal distribution of resources? Lawrence Reed, president of the Foundation for Economic Education, explains the misconceptions surrounding one of history’s greatest figures.

    Like

  • @David.

    We would have to see what the final cost is with regard to their input of foreign product. But as I said they are free to now source from where ever they see fit so they should benefit from that.

    Like

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