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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Was that personnel listing part of the projected savings from dollarization? (US or EU)
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DavidAugust 8, 2020 6:22 AM
@John
You listened to the Governor or read the report? You realize he touched on the matter you however preferred to speculate?
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Link is down.
Heard him a couple of days ago when it was up and found his explanation strange.
What do you think is creating the increase in reserves besides borrowing?
I was thinking maybe tourism but Mr. Naitram scotched that speculation.
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“You cannot read? It is not based on a simple average”
You cannot understand.
My post (6:00 p.m.) explain that whatever is being used the quantities for the two quarters would have to be similar to get an arithmetic average of 15. This is exactly what the person said in what you posted. I also explained that if they were not similar then it would not be 15%.But you all like to be baffled by BS and then you pretend to understand. The person said “weighted” average but he/she meant arithmetic average. Let’s not go down “all aritmetic averages are weighted averages with a single weight of unity (one).
I write for the bread butter man.
Throw a few word together; add a word that sounds technical; say 15% and that satisfies ham and eggs folks.
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@ William
I see you too are going down what Bajans call the rabbit hole. The discussion about mathematical calculations is silly. What is more important, and which the chief apologist does not even mention, is getting the central bank to publish its methodologies.
If I want to model the Fed, I can do it; the Bank of England, I can do it; the ECB, I can do it. But the Barbados central bank, I cannot with any accuracy.
Since the 1970s governments all over the world have been cooking the books on economic growth. Since this concept gained currency in the 1950s (Arthur Lewis, a St Lucian was one of the leaders of economic growth theory) it has dominated normative economic theory. From Rostow to Solow, the myth was that economies can grow and grow.
Our central bank and policymaker s are victims of this mythmaking. We need to know the definitions that the central bank is using. in making its assumptions. For example, the definition of unemployment changed in the 1970s. We now talk nonsense about economically inactive.
But the lesson of the second world war is that when the men went off to fight a war the woman ‘manned’ production in the factories, they ran the transport system, they worked on the farms. So the nonsense of women being housewives and therefore not interested in working full time was debunked.
The same with economic growth, implicit in the half-baked call for a growth in the population by the president in the face of reality, is that the more people the greater economic growth. Apart from everything else, it negates new technologies.
In 1800, the global population was one billion; by 1930s, it had doubled to two billion; by 1960s, it had doubled again to four billion and is now estimated to reach eight billion any time now.
If the global population continues to grow at a rate of 1.3 per cent, as it was in the year 2000, by 2780 it will be 148 trn. Think about it. And this unearth will have to feed, house and provide jobs for all those people. Wow! Somethings are unnegotiable and the growth of the global population is one of those.
At a time such as this, the one thing we can predict is that with an ever-expanding population we face even more epidemics, pandemics, floods, storms, hurricanes, water shortages, food shortages, air pollution, etc. The is the price of unending economic growth.
Do the maths. Apply the mathematical rule of 70: if the economy grows at an annualised rate of one per cent, it will take 70 year to double; at a rate of 2 per cent it will take 35 years; at a rate of five per cent, it will take 14 years. Apply this thinking to the claims of Owen Arthur’s economic miracle.I know you are not keen on Anglo-Saxon economic theory, but have a look at the concepts of substitution and efficiency and the contradiction at the very heart of it – the mumbo jumbo of fiscal space.
Another myth of market economics is that of stabilisation. It is waffle. Economies grow in the short-term, or they crash. There is no middle way.
I can go on, but by now you have got my drift. There are other ways of measuring improvements in the quality of life than economic growth. -
@ Sergeant at 8:26 AM
@ David BU At 8:35 AMYes. The Staff at the CBB are well qualified for the tasks of managing the Economic and Financial affairs of this country. It is therefore disingenuous to question the figures they put out without good reason. I question the need for this large expenditure on outside consultants.
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@ Hal Austin at10 :03 AM
You are on a roll these last few weeks. And I love it.Thanks for interjecting some reality into the debate. There is no need for perpetual growth in the GDP. It is the maintenance of the economic and social well- being of Barbadians that we should aim for. Growth is the means to that end; not the end itself. So in a sense we are engaging in intellectual idolatry.
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@ “In 1800, the global population was one billion; by 1930s, it had doubled to two billion; by 1960s, it had doubled again to four billion and is now estimated to reach eight billion any time now.
If the global population continues to grow at a rate of 1.3 per cent, as it was in the year 2000, by 2780 it will be 148 trn. Think about it. And this unearth will have to feed, house and provide jobs for all those people. Wow! Somethings are unnegotiable and the growth of the global population is one of those.”Except that the world’s population will not continue to grow at a rate of 1.3 percent. WOMEN are not that stupid.
And in any event since you [and I] will be duppy dust long before 2780 why should it bother you what happens then? I can also assure you that the events of 2780 will have ZERO impact on your life. I can assure you that hundreds of millions of people mostly more intelligent than you will be born and that they will manage, without any input from you. -
@Hal
“The discussion about mathematical calculations is silly. What is more important, and which the chief apologist does not even mention, is getting the central bank to publish its methodologies.”I think your first sentence misses the point of the silly mathematical calculations. Your second sentence explain why these calculations are being made. Without knowledge of the methodology we must (1) accept the figures without questioning or (2) we can engage in an exercise to see how the figures were derived or (3) ask for the methodology.
I do not believe that any of these approaches is better than the others.nHow long have you been asking for “additional information”? Do you think it will come tomorrow?
Always bear in mind that we have different interests. The different ways that you can manipulate the numbers (27, 3,) to get 15 may hold a fascination for some. Adding them together and dividing by 2 is just one way.
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Her is an old man sitting in a hut in cold dirty London in 1240 trying to anticipate and solve the world’s problems in 2020.
Hubris.
Hilarious!!!
And he was so busy looking at 2020 that he did not even see the Plague coming around the corner in 1347 which was going to kill him, and completely change the world for the survivors.
The old man sitting in cold dirty London was wasting his time. And he wasn’t even that old, he was only 42.
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@ David August 8, 2020 6:06 AM
Barbadians are very funny.
On the one hand, the masses are pushing exclusively into the civil service, as the long list of managing staff at the central bank shows, because they do not want to take on corporate risk and no working hours longer than 40 hours per week.
On the other hand, the political representatives of the masses (especially the outspoken racist Presscott) insult those minorities who bear the entrepreneurial risk.
I call that the Barbadian condition.
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@ Vincent
Thanks. I have been saying the same thing for decades, but no-one listens to me. I will tell you a story: sometime ago a group of Chinese journalism students, led by their professor, came to London, and they did the rounds: universities, top newspaper editors, etc. The last person on their itinerary was me.
I remember starting out my speech by saying to them to forget everything they had been told and I went on to tell them that the so-called new technology was just the tool, journalism is all about content.
Two things I remember about the encounter. First, one of the students, a good friends of mine, now working as an investment banker, starting laughing, and, so did the professor who could not stop giggling. At the end I was invited to China.
When you break with tradition, introduce a new paradigm, people heckle. Very few ask you to explain yourself. Don’t just accept received wisdoms. -
Tron,
It is not a risk if one has the means to manipulate the government to “level the playing field”, award overly lucrative contracts and run any new entrants out of the market.
This is one reason why the majority population is risk averse. The risks are all ours!
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We can debate the numbers but to me that is not where my concern lies. What i want to hear from the MOF and Growth Committee, is what plans do we have for recovery in a non traditional manner. In other words recovery not focused on tourism related revenue.
To me that is the conversation sadly lacking that our leaders seem unwilling or unable to have.
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@ John A
What are the projections for tourism? Where are these tourists going to come from? Nearly everyday I read the information coming our of our leading economic organisations and my interpretation varies diametrically from what our tourism officials seem to think. I know I am a bit slow, but am I really that dumb?
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@Hal
No sir you are far from dumb. I too have been watching the comments out of Canada and the UK and what they are saying in terms of a recovery, varies tremendously from what our people are saying here.
If one watches the share values of the tourism related publically traded stocks, you will see how badly a hit they have take. These are the same companies like the cruise and airlines that we need for seat capacity. One only has to look at Air Canada now with only 2 weekly flights and even those cant be filled. Royal Caribbean that was trading around $140 USD a share pre covid is around $40 USD a share now. Even when they return to the caribbean it will be in a greatly reduced form.
That is why i say the PM needs to have a frank and open discussion as to the reality of the industry going forward. Recovery for us can not be be tied to tourism this time around or we are dead before we start.
There is nothing wrong with government staying positive but it must be founded in financial reality.
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Tron August 8, 2020 10:56 AM “…bear the entrepreneurial risk.”
What risks”
Importing and selling to a captive market?
Living offa over-priced government contracts?
Stupseee!!!
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Stupsee indeed!
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@ Hal
@ John A
There is to be a Throne Speech soon. Please give the GoB time to get the speech together. It is an outline of their plan over the next session. In any case they cannot work miracles . No one knows in advance how soon COVID will take before moving to a downward trajectory. You and John A can make a draft and send it in for approval. -
@Vincent
Are you satisfied that after appointing a growth committee months ago not one single idea from that group has been made public?
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@ John A
The Electorate did not vote for a Growth Committee. Their report has no real value or power. It is advisory to the Ministry that set it up. Why do you feel entitled to the contents of the report? Is it made up of supermen.? -
Donna, Simple!
Did I talk about race? LOL. The top-performers are the minority on this island – as in EVERY society. There are many very successfull black businessmen in Barbados but the prefer to hide behind Bizzy and COW. They even encourage them to speak out in public since they are one tribe, the business class.
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@Vincent
The clock is ticking and a plan must be formalised and implemented in the next few weeks. Right now many are on NIS benefits but that is coming to an end shortly. The third quarter will be the telling quarter.
Besides seeing that my tax dollars paying the committe members and a good few consultants, yes i feel i am deserving of knowing what the plan is.
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@ John A
Ideas are a dime a dozen. Workable ideas require time,effort and relevant skills. What ever ideas the members have were all revealed in their previous statements on the economy. This committee qualifies for one of Hal’s renowned designations.
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Even if the government like, it can’t print excessive money to shore up the economy because it will undermine the pegged exchange rate. And even if we had a floating rate, it wouldn’t made much difference either, because we are an import-dependent, small and open economy.The currency would have depreciated by double-digit figure since march, like most floating currencies in south america. After which, high pass-through inflation follows.
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@ Vincent
I like that one, poor Hal’s ears must be itching. Lol
Seriously though time is of the essence here. My fear is that many of the companies will be unable to keep their full staff based on the current level of economic activity. I think by October we will get a true picture of the economic effects of covid. This economy can not recover with the current level of unemployment. Lowering that figure is going to be the challenge, while implementing growth measures in the current environment. The guys have been dealt a poor hand to play with thats the truth.
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We talking about recovery with tourism and today in the USA you have 250,000 motorcycle people gather in Sturgis for the bike event there, with hardly any wearing masks even though the positivity rate for testing in some places is over 19% in the USA.
We talking about tourism recovery but many out there in our major source markets just dont care and this will postpone any recovery for dependant economies like ours.
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On the matter of growth rates, I noticed that the developed countries tend to report their gdp growth rates by way of comparing present quarter figure ( ie absolute real gdp) with the previous quarter figure (absolute real gdp) and then ANNUALISED this number to get the growth rate. While other countries compare the present quarter over previous year same period quarter to arrive at gdp growth rates. What most do, is to use the q4 result (ie q4/q4) as the calendar year growth rate.These two rates can vary greatly.
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What if no vaccine is found for covid19?
What will the Government of Barbados and the private sector do to save the country?
Plans for a worse case scenario should be a priority.
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@ fortyacres at 6 :36 PM
Barbados economy is structured differently to those with which you are comparing it. Most of our economic output and foreign exchange is generated in the first two quarters of the year. That is the main reason emphasis is placed on them. Tourism and sugar normally then. it is almost solely tourism now. In your comparatives GDP is evenly spread over 12 months. The correct computation of Total GDP is calendar year 1 over total calendar year 0 times 100. GDP is a flow of income over 12 months. So if Barbados first two quarters are bad then we have a pretty good idea what the full year’s growth would be.
But we know this intuitively . Why are we harping on it. We should be creatively speculating on how best to ride out the closure of our main income generating markets. -
@Hants. Good question. If this thing continue at the same intensity into next year, dog eat our supper. Our poverty rate would explode. The government can do so much. We can’t print unlimited money like the us fed, eu central bank and the bank of japan.
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John A
The private sector traditional or otherwise need to keep their operations open. Closure of one business is an immediate reduction of income to other businesses. Businesses need to mutually keep each other in business. It is a circular flow of income and employment. That is what an economy is. GoB should have known this as well. Instead they drank the Kool Aid too and laid off workers. So we can decide to spiral down or spiral up. -
@vincent. You missed my point completely. I was only making a point about my take on comparative GDP reporting in general with developed and developing countries. Nothing to do whatsoever with the debate about our q1and q2 result.
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Wuh loss. I defaulting to my likes and scrolls.
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Here are my suggestions, in case the crisis continues:
A one-time capital levy for all Barbadians living abroad, say 20 % of all assets.
Confiscation of all private gold and foreign currency reserves in Barbados with the exception of the equity of commercial banks.
Introduction of an inheritance and wealth tax.
Consolidation of all social benefits to form the so-called poverty assistance.
Premium of 10000 dollars per family for emigration (“Panama award”).
Compulsory work for unemployed people on agricultural farms.
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@Cuhdear Bajan August 8, 2020 1:26 PM “What risks?” Importing and selling to a captive market?
Living offa over-priced government contracts? Stupseee!!!@Tron August 8, 2020 6:03 PM “Donna, Simple! Did I talk about race?”
And did I talk about race? Stupssseee!!!
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I am always very sceptical of any aggregate macro-economic data. The GDP is one such figure. Even though the text book definition is straightforward and simple, in reality, arriving at this absolute number ( nominal or real) is a very complex task, that is more of an art, than science in my opinion. The famous economist samuelson, once claimed that the GDP was a great intellectual invention of the 20th century. I beg to differ intensly. It is the most overrated number in all of economics in my opinion. And that is saying a lot, because the discipline is filled with a lot overrated statistics.
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The “AG” is all hot and sweaty over the black listing of Barbados and its practices.
https://barbadostoday.bb/2020/08/08/ag-says-barbados-will-fight-blacklisting-tooth-and-nail/
Money laundering is an issue more so than COVID and the advisory the US has placed on travel to Barbados.
So much for the genius idea of attracting people here as a get away from the virus!!
Whatever happened to that idea?
An educated guess would suggest the increase in foreign reserves was a result of borrowing and the offshore sector.
Even Gearbox could figure that one out.
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Even if the government like, it can’t print excessive money to shore up the economy because it will undermine the pegged exchange rate. …(Quote)
This is very interesting. Plse explain the economics of this argument, preferably quoting the authorities.
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Duguid: Jobs coming
There will be construction jobs in the coming months for scores of Barbadians.
Word of this came from Minister of Housing Dr William Duguid on Friday as Parliament passed a number of money resolutions to supplement the Estimates of Expenditure approved earlier this year.
The minister said 18 derelict buildings or some that were not being used were expected to be refurbished under a project to cost more than $10 million.
While not mentioning all of the properties, he said construction work would cover schools, the CLICO building, Parliament Building in Bridgetown and the temporary location at Hastings, Christ Church.
In a separate presentation, Minister of Education, Technological and Vocational Training Santia Bradshaw said schools including Wilkie Cumberbatch, Vauxhall Primary and Wesley Hall were among the properties. The school meals department building in Christ Church, she said, was also on the list.
Duguid said: “This $15 million is a seed that will grow . . . It will put people back to work.”
Recognising the negative economic impact the COVID-19 pandemic has had on Barbados, he said Government’s priority was getting people back to work.
His comments followed on the heels of a report by the Central Bank of Barbados that the economy contracted by three per cent during the first three months of 2020.
Unemployment has risen as the tourism and business sectors were hit hard by the shutdown with unemployment claims for March rising to 7 793 compared with an average of 624 in January and March.
“We have to get every single person’s hands to the plough,” Duguid said. (HH)
Nation newspaper
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Some nice words strung together.
Throne Speech coming at critical juncture
Recent events have made the forthcoming Throne Speech compulsory listening and will put the Speech under more than normal scrutiny.
The economy is under greater stress than at anytime in its history and the pressures are not being felt only by those at the bottom.
The attack of COVID-19 is pervasive and all sectors of the fiscal and class demographic block of the society are feeling the pain. In reality, all the previous bets, so to speak, are off, and a new start and a realignment of priorities is now required.
With the economy bloodied but unbowed, an emphasis must be placed on generating employment. This ought to be done, first of all, by regenerating our tourism industry as well as continuing to develop and execute all those new plans in the pipeline.
Science is the key to finding a suitable vaccine for COVID-19, and we must prepare for a return to normality. We must be ready for that moment and time, and continue to monitor the progress of the research in metropolitan capitals from which we draw our life-sustaining tourists on short-term business stays and vacations.
The Speech must outline a platform for the creation of a comprehensive interlocking of the fossil fuel-based system of the Barbados Light & Power and the generators of renewable energy. In this respect, we include a revised or enhanced programme for the electric vehicle industry.
The international business sector is a source of untapped potential for this country. Enhanced efficiency in the several regulatory agencies with which that sector relates must be mandated and proposals outlined and necessary action taken for the building out of that sector in a real and meaningful way.
The political misfortune of a leading offshore sector in the Far East and the emergence of the nomad worker provide a ready platform for the invitation to take advantage of our 12-month Welcome Stamp Visa. It is a good policy and the Speech must send an unequivocal message that this country is open for global business of substance without discrimination of any kind.
Greater attention must be placed on ameliorating some of the more stubborn of our social problems. Young people who wish to choose the straight and narrow path must be encouraged and given increased opportunities, both in the exploitation of the local economy, as well as in what one may call the global electronic economy.
A head-on tackling of violent crime is now due. A policy commitment to tackling this cancerous problem will now be necessary, but money has to be found for a vastly improved and efficient court system. Words must have meaning and action must follow quickly to rid this land of this scourge.
We are aware that the options are limited, but in the face of intractable difficulties, an administration committed itself in a previous Throne Speech to do the impossible. It created 30 000 jobs.
A Throne Speech which commits the administration to a policy of relentless pursuit and creation of a more even and equitable but stable society is needed at this juncture.
These times demand it and our people deserve it. It would be a stellar Throne Speech that sets the road map to reenergising our country in that direction.
It is not beyond us. We urge the administration to step boldly.Source: Nation Newspaper
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Letters Job well done by bank governor
I would like to highly compliment Central Bank governor, Cleviston Haynes, on a very sound and analytically correct presentation on the state of the economy during the first six months of the year.
Haynes, one of my first and best students at the University of the West Indies, showed neither fear nor bias in his presentation. He carefully identified the positive aspects of the economy, including the increase in international reserves and the stabilisation of the public finances, which provided “buffers” to protect the economy in its subsequent economic decline in the second quarter.
He discussed the deep recession of the second quarter which was caused primarily by the COVID-19 pandemic, which led to a collapse of the Barbados tourist industry. The output decline of 27 per cent in the quarter was associated with a very sharp rise in unemployment and a plunge in aggregate consumption demand in the private sector.
I was also impressed with Haynes’ answers to most questions in the press conference. He alluded to “uncertainty” as a major factor in formulating an economic growth policy for the economy because of the continuing COVID-19 pandemic. One can also share his belief that there is likely to be more private sector job losses as well as difficulties in starting projects during 2020.
Overall, and finally, one has to agree with
Haynes that public sector jobs must be maintained. At the same time, consumption spending has to increase in the private sector, which is heavily service oriented. This can only happen with an increase in the nominal money supply in people’s pockets. Many people have questioned this approach to “counter cyclical policy”, but any further removal of liquidity from the private sector and wage earners could drive the economy into continuing deep recession.
– Professor Michael Howard -
Virgin Atlantic has filed for bankruptcy in the US in yet another body blow for the airline industry.
The airline is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.
Non US companies use chapter 15 to block creditors who want to file lawsuits or tie up assets in the United States.
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Here is a govt who boast of having millions in reserves( never mind mostly borrowed) however cannot use some of that millions by way of placing some of those millions in the population hands which can help to stimulate the economy and stave off the freefall of ongoing business closure and stem the flow of unemployment
The millions govt have already place in tourism now becomes null and void as the USA govt placed a level 3 hammer in the neck of the barbados economy -
@Hal
I thought I read Branson had raised funding for restructuring in the the Uk equity market did that deal go through?
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@ Greene
You have to be careful with the Virgin model. Virgin Airways is majority owned by the Singaporeans; Virgin Australia is also majority Australian owned. Branson is more interested in travel to outer space.
Also, many (most) of the Virgin brands have failed ie Virgin Bridges. He rte is a little sociological tit b it. Why do most black travellers prefer Virgin and whites BA? (Those whites who travel on Virgin and blacks on BA please hold your horses). -
Science is the key to finding a suitable vaccine for COVID-19, and we must prepare for a return to normality. We must be ready for that moment and time, and continue to monitor the progress of the research in metropolitan capitals from which we draw our life-sustaining tourists on short-term business stays and vacations.
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But I thought the virus is constantly going through mutations!!
I’m not holding my breath waiting for a vaccine.
This is one which makes me doubt Trump, but then again I have often been wrong.
Besides, what do I know about viruses and medicine?
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@ Hal,
Branson had an airline and recording studios in Jamaica.
I should not comment on secrets of links between the two that I heard. -
Virgin Brides…….
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Currency reserves are rising because the native masses are unemployed and therefore cannot spend any money.
So mass unemployment is the solution to our foreign exchange problem.
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