Barbados: Economy records signs of recovery – grows by 1.3% in first half of 2016

The Barbados economy grew by 1.3 percent over the first 6 months of this year compared to virtually no growth a year ago, the country’s Finance Minister Chris Sinckler announced.

Delivering the Financial Statement and Budgetary proposals for 2016 to Parliament earlier this week, he said the economy registered positive, but weak growth in 2015 marking two consecutive years of improved growth.
Sinckler said that the economy grew by 0.8 percent in real gross domestic product (GDP) last year when compared with 0.3 percent the previous year.

Sinckler said the Central Bank’s current projection for economic growth in 2016 has been lowered to 1.5 percent from the earlier forecast of 1.6 percent, mainly because most major investment projects are behind schedule. He said for the first half of this year, there was a slight deceleration from the first quarter, mainly on account of unexpected delays in major tourism investment projects. In addition, total tourist arrivals exceeded last year’s high with a 5 percent expansion for the first 6 months of the year.

He told legislators that foreign exchange inflows and outflows during the first 6 months of the year were in near balance with BDS$3.083 billion (US$1.542 billion) in outflows as against BDS$3.040 billion (US$1.52 billion) in inflows.

“This, together with external debt service requirements, resulted in the stock of international reserves falling by BDS$43 million (US$21.5 million) to BDS$884 million (US$442 million), equivalent to 13.6 weeks of imports. This compares with the BDS$84 million (US$42 million) decline for the same period last year,” he said.

Sinckler said construction activity is estimated to have expanded by about 2 percent compared to last year, based on available indicators such as imports of construction materials, employment in the sector and construction projects currently underway. The average unemployment rate for the 12 months ending March 2016 was 10.7 percent, compared with 12.4 percent for the 12 months ending March 2015.

The Finance Minister said there was a 3 percent decline in the number of international business and financial services (IBFS) licenses granted during the first half of the year. The number of international banks stood at 28, with 6 banks having closed operations since the beginning of the year.
Sinckler said that between January and April, exports of bottled and bulk rum grew by 11 percent and 13 percent respectively. Bulk rum shipments benefited from a modest increase in regional demand.

He said government’s requirement for domestic financing was BDS$273 million (US$136.5 million) for April to June. The National Insurance Scheme and the non-commercial bank private sector provided BDS$92 million (US$46 million), leaving a BDS$180 million (US$ 90 million) shortfall.
“However, commercial banks reduced their lending to government by BDS$120 million (US$ 60 miilion)), which meant that government required an additional BDS$301 million (US$150.5 million) from the country’s Central Bank. Of this amount, BDS$198 million (US$99 million ) was drawn from additional deposits which commercial banks placed with the Central Bank during this period.

Private investment in the tourism-related sector is expected to be over US$600 million (US$ 300 million) over the course of the next 4 years. For the 2016-17 fiscal year, public sector investment of BDS$210 million (US$105 million) is planned, with BDS$165 million (US$82.5 million) being externally funded, Sinckler added. -(CMC)