Governor Cleviston Haynes delivers the Central Bank of Barbados’ review of Barbados’ economic performance in the first six months of 2020 and gives his outlook for the remainder of the year.
Source: Central Bank of Barbados
Central Bank of Barbados Review of the Economy: January – June 2020
Governor Cleviston Haynes delivers the Central Bank of Barbados’ review of Barbados’ economic performance in the first six months of 2020 and gives his outlook for the remainder of the year. Source: Central Bank of Barbados Central Bank of Barbados Review of the Economy – January to June.pdf (text)
244 responses to “Central Bank of Barbados Review of the Economy: January – June 2020”
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It’s time to activate my propsed STARVE program (wage cap etc pp, firing public servants). Without tourists our Aborigines have the economic power of about 5000 USD per head. I think that puts us in the African and Asian midfield.
In winter COVID19 will get worse again. Certainly the opposition will demand a second lockdown. Let’s see if the government can withstand the pressure. If not: It doesn’t have to be a roast beef for Christmas. Rats will do.
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So funny Tron so funny is that all you got in your humours bag of arsenal
A Starve and unemployedprogram.Fuh christ sake have a heart
Here is a govt who had ten years in the wilderness to create a growth program however decides to ride in the town on a debt ridden horse piling on massive debt
Boy uh tell when yuh not wearing the tight shoe yuh got all kknds of great ideas how to make the shoe fit comfortably but when yuh have to wear the shoe that is another story
As i alluded govt has a barrage of lazy thinkers called consultants not to mention the ministers who couldn’t tie a shoe lace no matter how hard they try
Imagine two and one half years gone by and not one policy whereby to create growth and put barbados economy into sustainable terriorty
Yet the mundane topics on BU makes BU sound like a gossip shop
Who really cares if George Payne who is infamous on social media as a crook gets fired or shuffled out the door
What bajans really care to hear how will they pay their bills ..keep roof over their heads and get a job
Btw imagine a city called Squatters Row would soon be relocated to another residence all at taxpayers expense
Isnt Barbados sweet doah -
Wrong, very wrong, Mariposa.
The opposition is to blame for everything, because they forced our government to take excessive COVID19 measures at the airport, which deter our tourists. Also racist and homophobic statements from the opposition are scaring off our tourists.
The opposition, not the government, wants my STARVE programme.
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The Governor indicated the government was focused on retaining public sector jobs because the economy would be in danger of “pauperizing” itself with so many workers sent home in the private sector. He gave BOSS as an example of government working to keep public workers from the breadline.
More jobs will be lost
By Colville Mounsey
With the 22-week layoff period set to end in a month for thousands of workers, the business sector is concerned that a large enough number of companies cannot take back those workers, or pay severance.
Both the Barbados Private Sector Association (BPSA) and Barbados Chamber of Commerce and Industry (BCCI) are urging the Government to get ahead of the impending situation.
BPSA chairman Edward Clarke told the Weekend Nation yesterday that the only way this fate could be avoided was if there were a major pick-up in economic activity in the short to medium term, but the clock was ticking for lesser capitalised businesses.
“When the 22 weeks are up, people would be due to return to work and the issue would be whether these businesses have the capital availability to retain these workers or to pay out all of them. I am not aware which businesses will face this issue, as some businesses have a stronger capital and balance sheet than others, but the reality is that some may not.
Not able to pay
“Those are the ones that would concern us, as one must determine what would happen to those employees, as a number of companies are likely to be in no position to pay severance. It is likely that the strain goes back on the public and that is something that we do not want to see, but we are in unknown waters and we need to tread carefully,” said Clarke.
His comments came one day after Central Bank Governor Cleviston Haynes, in his economic outlook for the rest of the year, said further job losses in the private sector were likely.
“The reopening of borders will enable some businesses to restart their operations and re-engage employees currently relying on unemployment insurance. However, some additional job losses can be expected as firms adapt to the reduced economic activity and uncertainty,” Haynes said.
Clarke said the governor’s report was not surprising to the business sector and additional job cuts were indeed likely.
“If we don’t see a pick-up in economic activity there would be more layoffs in Barbados. The Government cannot sustain an indefinite unemployment scheme and certainly the private sector cannot sustain a return to the employment levels of pre-COVID-19 with the economic activity. So, if we don’t see a revenue stream, people have to take precaution to protect the long-term survivability of their business and you would see some continuing expenditure cuts, which would include employment cuts,” he said.
Brace for closures
BCCI president Trisha Tannis said that in addition to the grim prediction of job losses, the country ought to brace for the closure of more small and medium-sized businesses.
She too, noted that major companies were likely to restructure, removing non-essential components in order to attain economic buoyancy, and therefore several layoffs were going to be converted to permanent job losses.
“It is a distinct possibility that a few more businesses are going to have to close their doors. Unfortunately,we do see some major players that are going through some very deep restructuring.You can well imagine that if large, well-capitalised companies are going through this sort of structural shock, then certainly the medium and small enterprises are facing harsher prospects.
“The larger companies are going to opt for restructuring so that they do not fold, but certainly when you are not as well capitalised, you might find yourself having to look for another enterprise in which to engage because the losses are just too overwhelming,” said Tannis.
Tannis said as the layoff periods were coming to an end, not all of those employees would return to their jobs.Source: Nation Newspaper
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To what degree will be used by the government and accepted by the electorate as a get out of ‘jail’ card for the economy time will tell.
COVID has Created Severe Economic Challenges for Barbados… But Some Indicators Remain Positive
Created 06 Aug, 2020
Central Bank of Barbados Governor Cleviston Haynes, revealed during his half year review that Barbados recorded a double-digit decline in economic activity for the first six months of 2020.“The virtual cessation of activity in the tourism sector, combined with curfews and temporary business closures, deepened the initial contraction that was realised during the first three months of the year. Preliminary data now suggests that economic output fell by 27 percent in the second quarter, resulting in an overall decline of almost 15 percent over the first six months of 2020.”
The slowdown in the economy resulted in significant job losses, with more than 33,000 unemployment claims and a total pay-out of over $70 million being recorded by the National Insurance Scheme between late March and the end of June. More than 30 percent of those claims were by people directly employed in the tourism sector, which saw long-stay arrivals decline by approximately 54 percent and cruise arrivals down by 34 percent, but layoffs were not limited to that sector. Retail (also known as the distribution sector), construction, and real estate, and other industries have also seen layoffs, underscoring how significantly tourism activity impacts other areas of the economy.
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@Dullard
The blogmaster is willing to be educated. Does it matter the size of the output achieved in both quarters to determine the real percentage decline?
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“Preliminary data now suggests that economic output fell by 27 percent in the second quarter, resulting in an overall decline of almost 15 percent over the first six months of 2020.”
Very poor work by the Governor and whoever else put together this report.
The “overall decline over first six months” can NEVER be 15%. In Q1 the decline was 3%. In Q2 it was 27%.
Therefore the “overall decline over first six months” is 1- [(1-3%) x (1-27%)] = 29.2%. This is almost double the 15% stated in the report.How can this report be taken seriously when the very first paragraph has such a blatant and basic error.
@Blogmaster could you delete the duplicate post above with the typo please?
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Does it matter the size of the output achieved in both quarters to determine the real percentage decline?
Of course not. But that is not the point. The point is that all numbers should be sensible, consistent and credible. And these are not.A 27% decline in Q2 following a positive, non zero decline can never any where near 15%. This is such an egregious error that I would be tempted to be suspicious of the CBB’s data, methodologies and peer review processes.
I would love to hear someone from CBB explain where the 15% comes from.
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@Dullard
Your approach, I believe, is the correct one and is one of the ways I tackled it.I suspect that some sort of averaging was then done.
If you average your number and round-up, you get 15. I am no economist, but I have a great deal of experience in ‘lies, damn lies and statistics’.
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@Dullard
Let us see if Vincent feels inclined to clarify this matter. Why would the central bank try to obfuscate a matter like this which will receive the glare of scrutiny from all and sundry?
You guys need to relax.
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@David
It would appear the governor used a sliding average to arrive at the 15%. In other words 1+27=28÷2=14%
Numbers can be played with depending on how they are presented
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@John A
Thanks, would you have used this calculation to accurately reflect the performance quarter over quarter to show overall decline?
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@David
When I say how they were presented let me give you an example.
Say a store sells $10,000 a day and its sales fell to $7500 a day. If say a newspaper wanted to stress how bad things were, a headline could read THINGS BAD SALES DROP A WHOPPING 25% IN A SINGLE DAY. Another person wanting to paint a bright picture, could also say and be correct SALES FELL BY ONLY $2500 ON THAT DAY.
Both would be correct, its all about presentation and purpose when the statement is made.
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@John A
It seems from the utterance of the Governor the government is committed to protecting public sector jobs. One must assume the x variable to being able to sustain such a position is the period of the global downturn as a result of COVID 19 and the efficiency of government managing expenditure and forex reserves. Agree?
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The statement by the Central Bank is nonsensical, but the media is math illiterate so it has been widely reported without question. Presumably, What the Central Bank meant to say was that “…economic output fell by 27 percent on an annualized basis in the second quarter, resulting in an overall decline of almost 15 percent over the first six months…”
The omission of those four words, and the fact that no reporter could tell that it was an error, makes me weep for the education system in Barbados.
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Naitram urges restructuring of main economic engine
Article by
Marlon MaddenPublished on
August 7, 2020President of the Barbados Economic Society (BES) Simon Naitram is raising an alarm that the tourism sector could prove to be a net user of foreign exchange more than it is a contributor, given the economic performance so far this year.
Reacting to the Central Bank report, which showed a major decline in economic activity of about 27 per cent over the last three months, Naitram said three things stood out to him most – the performance of the international reserves and tourism’s estimated contribution, government spending and the overall impact of the pandemic on the economy.
In his report yesterday, Central Bank Governor Cleviston Haynes said due to the 27 per cent decline in economic output in the second quarter of the year, the economy declined by almost 15 per cent over the first six months.
This was due to the effects of the COVID-19 pandemic.
Haynes also reported that the international reserves grew significantly, by $536 million, largely due to borrowings from the Inter-American Development Bank and the International Monetary Fund.
Government spending rose almost eight per cent, to reach $570.7 million for the first six months.
Naitram, who recently called on authorities to urgently restructure the tourism industry, told Barbados TODAY the “big” decline in economic activity was expected given the current circumstances.
However, pointing to the increase in foreign reserves, he said this was “an entirely surprising figure”.
“Why? The Central Bank reported a $536 million increase in the foreign reserves—of which $438 million was an inflow of borrowed funds. That’s a net increase of almost $100 million in a period where tourism activity fell by more than 50 per cent,” he said.
“If tourism really is our main foreign exchange earner, then there should have been a similarly large decline in foreign reserves. While there may be other factors at play including supply chain disruptions and decreased domestic demand, the data seems to suggest that tourism could actually be a net user of foreign exchange rather than a net earner. This may be due to the structure of the tourism industry, with a heavy reliance on foreign ownership, an internationally-based payments model, and an import-oriented business model,” he explained.
Shifting his focus to the modest increase in government’s expenditure, Naitram said such an increase could be considered a good thing generally, but given the crisis situation facing the country “spending forms an important part of the policy response” and it was expected to be higher.
The economist said: “In particular, we expected increased spending on policies aimed at keeping small businesses alive in order to limit permanent scarring from the pandemic.
“The small increase in spending raises the concern that policy implementation might be stalled, or that the policies may not be easily scalable. This should sound alarm bells for the planned public and private capital works projects, which will need to get off the ground quickly,” he added.
He said the country was now slowly getting a clearer image of the effects of the pandemic, the health and economic risks, and the trade-off between those risks.
Naitram is hoping that better policy decisions would be taken in coming months to limit any further economic fallout.
“As we get better information and a better understanding of the situation, it will hopefully help the Government and the Central Bank to make better policy decisions about how to limit the economic damage from the COVID-19 pandemic during the second half of what has already been a long 2020,” he said marlonmadden@barbadostoday.bb
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@david
If you don’t see a problem with the CBB reporting a headline figure that is half of what is supposed to be based on their own statistics, then just say so.@ John A
The use of averages make zero sense in this context. How much has the economy shrunk in 2020? That is the question. The Guv says 15% whereas his own numbers say that the decline is double that. -
Here the chief apologist goes again. He never tires of trying to call rain sunshine when it fits his political purpose.
Simple fact; Tourism down plus 50 %; unemployment at 28 % and the NIS heading into dangerous waters. These facts do not reflect the current administration’s, considerable efforts , to halt declind before COVID-19.
However, we need to just accept that we have been bowled an unplayable yorker by fate. Let us stop trying to make mud flour or sugar. Our country’s economy now calls for creativity and innovation to pull it back from the brink. I await the the throne speech and what we are going to do to survive in this precarious period. Saying “this is who we are and we are all in this together” , may be nice and uplifting slogans but we first need to accpet two basic realities:
1. Our current economic situation is not the government’s fault
2. Correcting it is going to call for a national effort by ALL citizens and interest groups
My first suggestion to the PM and cabinet is to put confidence in the hundreds of budding and existent small to mediums size businesses , by injecting any available millions into their effotrs, this will quickly create employment; unleash some money in the economy and dampen imports thereby protecting foreign ex. Rather than trying to hopelessly raise forex via tourism lets save it by injecting limited funds into our own people..
We put all our eggs into the tourism basket and the results are there for all to see. Making the same mistake twice will be economic treason against the state. -
@Dullard
Why would you arrive at such a conclusion? The blogmaster is on your side. All of us want to know the most accurate way the data should be presented. Surely there is a best practice for this kind of thing? You should be use to this blogmaster’s modus operandi by now.
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Why ca’nt we put all government workers on a four day week ? Why can’t we slash all MPs salaries by 12 % ?
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@ Dullard
You fall for it every time. I now refuse to debate with some people.
@PLT
The media are mathematically illiterate. Are you including BU?
I have said before, unless you are told the methodologies numbers can mean anything.
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@ david.
Yes the problem is we want to hold on to jobs so as not to bring a recession or add to the 33,000 unemployed. The problem is this will come at the price of a massive deficit. If you remember earlyier in the year i told you we could run a deficit in excess of $500M if we didnt reduce our expenses or regain growth.
The truth is we are between a rock and a dam hard place right now. If we lay off public sector workers to reduce the deficit we risk a recession. If we keep on as going we will have a massive deficit.
Pick wunna poison.
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@Dullard
The governor is not wrong and neither are you depending on the formula chosen. If the Gov based his statement on a cumaltive YTD total and took an average he may well get 15%. If you only look at month to month then for say March or April you may see 27%.
Now the question we can debate is the Gov’s way misleading? One could argue yes or no. Is he wrong the answer would be No. As i said its all about how one formulates the figures.
What i have noticed with this Gov is he gives us all the figures. If he chooses to package them in a positive way that is his right. Remeber he is not changing the figures just packaging them for presentation.
It is then left for us to disect them.
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Another BULLSHIT BAFFLES BRAIN report. Figures(math not shaply) comes from the Barbados free education system, hmmmm. I particularly like the HIGH FORGIVEN RESERVE numbers, not much mention that 75% of this number is BORROWED MONEY and not GDP generated. Countries financial stability continues to deteriorate. CBG even donated a page to BOSS and attempted to put a positive spin on this DEBT(which has a better than even chance of never being repaid), the issue this is more DEBT and continues to support an inflated and under performing civil service.
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@David
The problem we face is we know where we are, the question is what plan do we have to move from here?
That to me is where the deafening silence is!
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@John A
In an environment where the economy was working to stabilize before the pandemic struck what are the drives that we can suddenly pull to trigger growth? Like you said, between a rock and a hard place. We can continue to reallocate expenditures in the budget but with deminsiding revenues what are the options? The borrowings and grants we have accumulated for infrastructural development will take us so far. We can promote micro business but this will not move the needle to stop the free fall when the reserves hit critical.
From a practical standpoint the government has to manage the fine line between creating a safety net for the vulnerable and at the same time implement strategies to prepare for when the global economy responds. This is the plight of an open economy ad SID.
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It is difficult for us to understand how any government could have made such a fundamental misjudgement about the economy thereby failing to see the depression which we had long forecasted and now expects that it can hide under a Covid rock.
That some here would provide the escapism for government to simply have another throne speech as a way of ignoring the underlying indicators of this depression which should have informed their pre-election thinking.
Indeed, what we really need is a new election for goverment”s new thinking to be subjected to broad the appropriate scrutiny.
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@Hal & @David & @Dullard
The facts are as follows:
1. Barbados’ economic output fell by 3% on an annualized basis in Q1. This means that if the economic output continued to fall at that pace the decline would be 3% over a year. Economic output fell by 0.75% between January and March.
2. Barbados’ economic output fell by 27% on an annualized basis in Q2. This means that if the economic output continued to fall at that pace the decline would be 27% over a year. Economic output fell by 6.75% April and June.
3. The total fall in economic output in Barbados is therefore 7.5% over the first six months of 2020. On an annualized basis this is a rate of economic contraction of 15%.It was grossly incompetent of the Central Bank to present the data in the way they did. It is grossly incompetent of the local media to simply quote the figures without finding ways to explain them to the public.
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@David
What i see sadly lacking from government is a frank and open diacussion as to how we will move on from here.
In other words do we plan for a 3 yr alternative energy project where at the end we will be 30% less dependant on oil imports?
Is there a plan say to reduce food imports by 30% over the next 3 years with an island wide green house project?
Is there a fresh water fish farming project where we can dam run off water and start raising fresh water fish for the supermarkets?
In other words what is the dam plan and when it going start to help us reduce the demand for FX and promote economic growth?
What has Chris “Zerox” Sinkler and his band of planners come up with?
It is this that i find totally frustrating.
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@PLT
What it shows is the press dont have a clue about understanding numbers as Hal has been saying for ever. The Gov hands us a nicely wrapped box but nobody bothers to open it and explore its contents.
Well nobody except we miserable people here on BU. LOL
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@ John A
That is called fiscal space. Talk to Dr Greenidge.
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@John A
What you want maybe coming in the Throne Speech when parliament returns in September?
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@Peter
Thanks!
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@ John A
Hold on until Sept 15 for more on tourism. Has this government, or the tourism authorities done a projection on tourism in the short-term, post-CoVid? If so, is it publicly available? If not, why not?
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We will not see an economic recovery for the rest of the year either.
The few air passengers who come to Barbados are mostly poor windrushers or equally poor returning Barbadians, but not foreign tourists who are eager to spend money.
So we have rat for Christmas after all and no roast beef.
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@PLT
I didn’t think of annualised rates. I assumed that they would plainly state what their own numbers mean. This is actually more embarrassing because that one word changes the entire picture.
Cheers!
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WS
Putting workers on a 4 day wee is the samething as a salary cut
You would have to repeal the law to do both of you suggestions.You cannot reduce anyone wages/salary without their consent .
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@John2
You can with a constitutional change.
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Why should a news reporter or Editor of an ordinary newspaper in Barbados be expected to interpret a report by the GOVENOR OF THE CENTRAL BANK ?
We should expect accuracy from the top maguffees who get paid kazillions of dollars for their QUALIFICATIONS AND COMPETENCE.
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Dullard
This must be a first for you – the oversight. It can happen to the best of us.
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Dullard
How about this?
For the first 3 months at 3 per month = 9
second 3 months at 27 = 81total over 6 month = 90
average for those 6 month = 90/6 = 15
0r as john A 3 + 27 = 30 / 2 quarters = 15
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David
Did you missed where i said you have to repeal the law?
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@ David BU
The Governor has given his assessment of the performance of the economy for the first half of 2020. No surprises given the virtual close off of the economy. However we slice and dice the statistics there has been a decline which we all expected.
It is very difficult to make a forecast with the rapidly changing landscape. Policies going forward can only be mitigating. There should be no surprises in the coming Throne Speech. There are some compelling parameters for very small developing economies, and the chief one is that of control of the International Economic System and the seismic contortions it goes through from time to time. Of course we can opt to jump off the planet but not at the expense of my tax dollars nor further tampering with the National Pension Scheme. It is already close to collapse. -
@ David BU
I did not see any framing of the statistics by the Governor to support any particular position. The charts and statistics were published so that any commenter may write his favourite narrative.
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@Vincent
Agree with most of what you opined.
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@John2
Amend not repeal.
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DAVID
i was referring to the law passed by OA/BLP after Sandy 8% cut in the 90s.
Amend / repeal /modify/ update makes to difference to me. Just that it is illegal and you would have to change the law to make it legal.
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@Hal
This is where a well trained financial reporter should be educating the public by picking apart the data and delivering it to them in small information bites that all can understand.
Then again a good half ass opposition should also do the same thing.
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@John A
What about the faculty of business at Cave Hill?
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@David
Yes they too would be an excellent non bias option to break it down. The issue with reports like these is that much can be couched by the way one shares the information. As PLT said earlier, this information went out to a host of reporters who questioned nothing. Not that the information shared was wrong, its just it was put out using a formula that was shall we say “favourable” to all.
The Gov did his job, its just once again the media and opposition have failed miserably to do theirs. In other words its not a case of what was said more so one of what wasnt said.
The blogmaster invites you to join the discussion.