Central Bank 2021 Half Year Review – Hard Road to Recovery

The Governor of the Central Bank reported two consecutive quarters of growth although it must be stated Barbados economy performed below pre COVID 19 GDP levels – 3.2% to be exact. There was an increase in activity in the tourism sector even as COVID 19 continues to run rampant in the country. The thousands of workers serving the hospitality industry must be happy. The cold reality however is that the economy shrunk 18% in 2020 therefore any mention of the word GROWTH in 2021 must be translated in context.

There is a long, hard road to travel.

117 thoughts on “Central Bank 2021 Half Year Review – Hard Road to Recovery

  1. The report was the same basically with the date changed. We continue to do poorer as the months slip by.

    It’s the same old story the central bank blames the bank for high cost, the banks blame the central bank for lack of direction and the government plans for a republic.

  2. Barbados facing $1 billion deficit

    By Shawn Cumberbatch

    The tourism industry’s collapse and its subsequent slow rebound, have left Government with a near $1 billion financial problem which an increased supply of foreign money is currently solving.
    This was evident in new Central Bank data, which showed that the $958.5 million current account deficit on the balance of payments (BOP) at the end of September was also due to increased imports this year, especially for fuel.
    The current account is the difference between the value of exports of goods and services and the value of imports of goods and services. It is part of the BOP, a mechanism used to monitor financial transactions with the rest of the world.
    Finance expert Professor Justin Robinson, of the University of the West Indies, Cave Hill Campus, said while a current account deficit was not unusual for Barbados, the current gap was wider than normal, and he attributed this to the big fall in inflows from travel.
    Robinson told the Weekend Nation tourism’s rebound was key to reducing the current account deficit.
    “Certainly the slowdown in tourism is showing up in that balance of payments. We usually have a deficit on the current account but it has widened and that’s really record low earnings from tourism really leading to a surge in the current account deficit, which has to be financed by capital flows,” he said.
    “That’s a big number, and if you look at prior years September-on-September it’s by a long way the largest September record if you look at 2017, 2018, 2019, and 2020 and that’s all about tourism being so much lower.”
    Barbados’ overall financial outflows reached $3.46 billion at the end of the third quarter, compared with inflows of $2.5 billion.
    The Central Bank said the decline in the foreign intake from tourism was $375.4 million at the end of September when compared with the same period last year. The decline was $1.3 billion in 2020 versus 2019.
    “The reduced earnings from tourism services weakened the current account performance over the first nine months of the year. In addition, exports of goods fell and imports of goods, which contracted the year before, strengthened between April and September,” Central Bank Governor Cleviston Haynes explained in the bank’s latest economic review.
    “Fuel imports represented approximately 70 per cent of the expansion in total imports, reflecting the rising cost of fuel on the international market.
    “However, despite rising international prices and increased import volumes over the past six months, the increase was contained by lower than normal imports of aviation fuel because of the reduced tourism activity in the earlier months of the year.”
    The Central Bank data showed that Barbados’ foreign inflows from services other than tourism increased by $26.7 million at the end of September, and domestic exports fell by about $13.1 million in the same period.
    On the other hand, Barbados has spent $103.3 million more on services this year, $52.1 million more on fuel and about $2 million more on other merchandise imports.
    With tourism still not at 2019 levels, Government has relied on foreign loans to close the financing gap. The financial portion of the BOP published by
    the Central Bank showed that Barbados received $968.1 million in policy loans last year, and $249.1 million at the end of September. Barbados had also received about $325 million in foreign direct investment at the end of September.
    Fitch Solutions Group Ltd, an affiliate of international credit rating agency Fitch Ratings Inc., flagged Barbados’ current account deficit challenge in a country risk commentary dated October 12, 2021.
    It predicted that “rebounding tourism activity in Barbados in fourth quarter 2021, 2022 will underpin stronger services exports and narrow the current account deficit”.
    “We at Fitch Solutions have revised our 2021 and 2022 current account deficit forecasts to 4.7 per cent of GDP and three per cent, from five per cent and 3.2 per cent previously, as remittance inflows surprised to the upside in the first half of 2021,” the firm said.
    “That said, rising import demand in 2022, combined with slowing remittance inflows, will partially offset the impact of increased services exports.”
    Fitch Solutions noted that for Barbados “the COVID-19 pandemic sharply narrowed the services trade surplus in 2020, leading to a significantly wider current account surplus than the average 4.1 per cent deficit from 2015 to 2019”.
    “Goods import growth of five per cent in 2022 and slowing remittance inflows will limit the narrowing of the current account deficit. We forecast that real GDP growth will reach four per cent in 2022 as the impact of the pandemic fades,” the company predicted.

    Source: Nation

  3. “Remittance inflows have surged in recent quarters as Barbadians working overseas have sent more money home to bolster household incomes, which have fallen due to the recession. Remittance inflows increased 260.2% in 2020 and grew 10.8% y-o-y in H121.” (Fitch)
    Hmmm…260%!!! and a further 10.8% growth in 2021. Looks like dem earning their right to vote?

  4. PAC ended today like a barking dog pelted with rocks
    All bark but no bite
    The principles upon which the committee was founded to investigate and do diligence failed to meet its intended targets
    Once again a poor rakey Parliament left looking like deers in the headlights
    Hope the lunch break was good after all tax payers money was at work

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