Buckle Up – Central Bank Economic Review About the Numbers
The keynote of Governor of the Central Bank Cleviston Haynes’ latest review of the performance of the economy was about growth for 5 consecutive quarters. The blogmaster is happy we are seeing an uptick in economic performance. Who does not want to see growth EXCEPT the ignorant and those rabid political partisans. Oftentimes we forget an economy is about how people in a country efficiently utilize resources with a goal of supporting a reasonable standard of living.
However, five consecutive months of growth in the local economy, if one considers that in 2019 the global economy was significantly impacted by the pandemic should not be waved as a pretext that it will be business as usual. It is known by all and sundry our economy has a structural problem. The blogmaster recalls Dr. Frank Alleyne in 2008 – at the time serving as financial adviser to late Prime Minister David Thompson’s adminsitration- making the point there was an urgent need to address a tired economic model inherited from Barrow. It is 15 years later and the conclusion any fair minded commentator can make is that there has been negligible change to the structure of the local economy. We continue to be over reliant on tourism. It is understandable given the natural beauty of the Caribbean people will want to visit for a price BUT too far east is west.
Of mighty concern is the average Barbadian seems blissfully unaware the challenge the island is currently facing because we are a price taker in a global economy that is seeing a spike in inflation for commodity and services. It is fashionable of recent to blame the disruption to global supplies because of COVID-19 and Ukrainian Russian conflict or a slow down in the US economy which is forecast to enter a recession soon with the Fed intervening for a second time to raise interest rates. The performance of the US economy is important for Barbadians to take note given the parity of the Barbados dollar to the US dollar. Through it all too many Bajans continue to expect a broke government to be able to fund conspicuous consumption habits, giving credence to the adage – a people with champagne taste and mauby pockets.
Where do we go from here?
To a simple way of thinking, we have a people comfortably living a lifestyle that is unsustainable and has to be continually supported by debt financing. We have also the situation of successive governments, in order to maintain popularity, fueling the addiction of citizens to conspicuous consumption by borrowing. And thirdly Barbados is plugged into a capitalist system which will drag us along with it IF…We are truly in a pickle. A situation which older folk describes as one not being able to tell the other comeback.
Your guess is as good as this lowly blogmaster where we are headed. We may agree that if we continue to buyin to the notion that our borrowing is within our capacity to repay without factoring the inherent risks of a small developing state, we should sit back, buckle up and enjoy the ride to the Economic Cliff.