BRIDGETOWN, Barbados, Friday January 16, 2015, CMC – The Central Bank of Barbados (CBB) Tuesday said that the island’s economy is poised to achieve growth of about two per cent this year up from the 0.3 per cent in 2014.
In an analysis of the Barbados economic performance, the CBB said that the growth in 2015 will be as a result of tourism and construction activity and the spin-off effects to wholesale, retail and business services sectors.
It said that the tourism industry is expected to benefit from increases of nine per cent and 20 per cent in airlift from the United States and Canada, respectively during the winter season.
The CBB is projecting an estimated BDS$300 million (One Barbados dollar =US$0.50 cents) of construction activity in 2015, mostly in the private sector.
“Over the medium-term, assuming that new revenue measures are implemented in fiscal year 2015/16 and current revenue measures extended, the deficit is projected to decline to about five per cent of gross domestic product (GDP).
“The Medium Term Growth and Adjustment Strategy is being brought back on track, with a view to achieving a nominal economic growth rate which exceeds the fiscal deficit by Fiscal Year 2016/17, after which the ratio of debt to GDP will decline,” the CBB said.
“Overall economic activity is estimated to have improved by 0.3 per cent in 2014. Construction activity expanded by an estimated one per cent percent, largely on account of about BDS$152 million in investment in tourism related projects.”
The CBB said that construction and increased export demand for quarrying products, contributed to the 21 per cent growth in mining and quarrying. Solar generation capacity grew by three mega-watt hours to seven mega- watt hours.
It said that at the end of October 2014, the 12-month moving average rate of inflation slowed to 1.7 and that the average annual unemployment rate at the end of September rose to 12.5 per cent, largely because of job losses from the fiscal consolidation programme.
But the CBB noted that the fiscal consolidation measures of the past 18 months have stabilised the foreign reserves, and the foreign reserve movements in 2014 reverted to the normal pattern observed in 2010, 2011 and 2012.
The CBB said that the stock of reserves was BDS$1.05 billion at the end of December, representing 14.5 weeks of import cover.
“Up to December, the fiscal deficit was financed by a drawdown of Government deposits with the banking system (BDS$238 million) and at the Central Bank (BDS$174 million). Additionally, the Bank provided BDS$158 million in financing and the National Insurance Scheme BDS$95 million. Commercial banks and private non- bank investors reduced their financing to Government by about BDS$104 million and BDS$30 million, respectively.”
The Central Bank said that tourism value-added is estimated to have increased by one per cent, reversing the downward trend witnessed over the last three years.
It said long- stay arrivals rose by one per cent and visitors stayed slightly longer than in 2013.
“Increased airlift out of the United Kingdom contributed to growth in arrivals of 10 per cent, but arrivals were down from the United States and Canada, by three per cent and four per cent respectively.”
The figures show arrivals from Trinidad and other Caribbean Community (CARICOM) markets contracted by 12 and nine per cent respectively.
“In 2013, the most recent year for which we are able to make the calculation, Barbados’ tourism prices were 19 per cent more competitive than in 2008, compared with other Caribbean destinations, while prices of international business and financial services (IBFS) were nine per cent more competitive.”
The CBB said that initiatives were undertaken in 2014 to further leverage Barbados’ advantage in the international business sector.