The ‘omnipresent’ Governor of the Central Bank Dr. Kevin Greenidge is on message for the start of 2025. After a recent upgrade by Trinidad based CariCRIS, he called for Barbadians “…to invest. Whatever project they were planning, take it off the shelf, dust it off and go because that is how we are going to get the economic growth”.
There was also hype about the economy achieving 3.9% growth and unemployment rate holding at a respectable 7.7%. Truth be told GDP and the unemployment rate are the two key indicators used to track economic performance by successive governments. If it were business as usual the blogmaster would give unequivocal congratulations.
Traditional media actors and talking heads must be dispassionate in commentary about the performance of the local economy. There has been no fundamental change to the economic engine driving the economy. The growth being heralded by the Governor and government can be attributed to tourism with financial services chipping in. The ‘other sectors’ like manufacturing, agriculture and other services are statistically insignificant to moving the performance needle.
If we agree that Barbados is a one-leg economy, on what basis is Governor Greenidge and Prime Minister Mottley saying the economy has become more resilient in the post 2018 period? As far as the blogmaster is concerned we have no R&D and export creating industries; we continue to be a net purchaser of products and services, practically all of our foreign direct investment is tourism related.
The blogmaster recognises that there are ongoing attempts to rebuild crumbling infrastructure but much needed governance and law and order initiatives continue to undermine government’s transformation program. Lack of reform to State Owned Entities (SOEs) is one example of government’s lack of serious commitment to a transformation program it promotes. Does public sector reform sound familar?
Back to Governor Greenidge’s call for Barbadians to invest. In theory some of us understand for the economy to grow individuals and businesses will have to invest. Investment increases productivity, jobs, consumer activity and so on. However, Greenidge must know it is not that simple to command Barbadians and private sector to invest and it will occur. There are cultural characteristics that have given good reason for Barbadians to be described as being risk averse.
Historically Barbadians have not had appealing options in which to invest. The Barbados Stock Exchange exists in name only with small trade volumes. There is no Secondary Market. Even if these markets existed there is good reason to doubt a significant number of Barbadians would participate.
A lot of work is required to educate Barbadians about the upside to investing given what opportunities available. Bear in mind too many Barbadians are financially illiterate. An average Barbadian understands investing to be growing a saving account. Although in the past a segment of Barbadians was bullish on government bonds as the preferred option to invest, the 2018 haircut the Mottley government gave to bondholders has undermined public confidence in government bonds. On a daily basis the public is bombarded with promos to encourage Barbadians to purchase BOSS bonds.
There is a lot of work to be done to shore up the Barbados economy before any credibility can be earned that it has become more resilient. Also, let us tone down the rhetoric about ratings by credit rating agencies. Some of us have not forgotten these agencies were partly responsible for the 2006 global financial collapse.
The blogmaster invites you to join the discussion.