BRIDGETOWN, Barbados, July 28, 2008 – Rising world commodity prices have caused a significant slowdown in the Barbados economy.
Governor of the Central Bank of Barbados, Dr Marion Williams, reported last Friday that the 1.4 per cent economic growth recorded by Barbados over the first six months of this year was the lowest growth level recorded for the two quarters in the past five years.
“During the first six months of 2008, the pace of real economic activity in Barbados was constrained by persistently high international prices for oil and other major commodities, as well as the slowing global economy,” Dr Williams told a media conference at the bank’s headquarters in Bridgetown.
Calling Barbados’ economic performance “uneven” over the first half of this year, she revealed that after recording growth of 2.6 per cent between January and March, economic output was then “virtually flat” over the next three months.
Dr Williams contrasted the 1.4 per cent growth with the 3.6 per cent average rate of expansion recorded over the first two quarters of the last five years and attributed the current growth rate to slowdowns in both the traded and non-traded sectors.
Non-traded activity grew by an estimated 1.6 per cent, which was approximately 3 percentage points below the average increase in these sectors during the first half of the last five years; while traded output grew by almost one per cent, which she said was also significantly below the average rate of increase between 2003 and 2007.
Over the first six months of 2008, real tourism value-added rose by approximately 2.7 per cent, compared with an increase of 3.1 per cent in the corresponding period of 2007.
While output in the wholesale and retail trade, transportation, storage and communications, business and other services sectors grew moderately, with each industry rising by just over 3 per cent, activity in the construction sector fell by an estimated 6.7 per cent.
The end of several major infrastructural projects relating to Cricket World Cup 2007 plus a reduction in private residential and commercial real estate had the knock-on effect of dampening utilities production, with output of electricity, gas and water contracting by an estimated 1.4 per cent.
Dr Williams further reported that this year’s sugar harvest yielded some 2,300 tonnes less than the 2007 crop although output in the non-sugar agriculture and fishing sector increased by 1.7 per cent, resulting principally from higher fish catches and milk production of 6.5 per cent and 2.1 per cent, respectively. She said that manufacturing output also dipped slightly, as the gains in the production of electronics and beverages and tobacco could not compensate for the fall in chemical production.
And things are not looking up for the rest of the year as Dr Dr Williams told reporters that the current outlook for the rest of 2008 is for real output growth to be in the range of 1.5 per cent to 2.0 per cent. Moreover, she said this was only if there was no worsening in the slowdown of Barbados’ main trading partners or if prices of oil, food and other commodities did not rise further.