The latest review of the Barbados economy by the Central Bank governor Dr Kevin Greenidge presented the kind of backdrop with which any administration would be pleased.
In a world where uncertainty and turmoil reign, economic planners will be buoyed by news that the island recorded its largest three-quarters of economic growth in 17 years as it grew over ten straight quarters.
The Central Bank of Barbados (CBB) announced in its last quarterly update on May 30 that the economy grew by 4.1 per cent in the first nine months of 2023, the biggest comparative expansion since 2006, excluding the COVID-19 pandemic recovery period last year when it improved by 17.3 per cent.
In addition to the growth, we learned that more Barbadians entered the job market as unemployment dropped in the second quarter to 8.5 per cent.
Given the number of vacancies online, particularly in the hospitality sector, one would have assumed that the unemployment rate would have been lower than 8.5 per cent.
The lack of appetite for hospitality sector jobs such as waitering and other food and beverage posts may require some investigation.
Following the devastating impact of the pandemic on tourism workers and the less than stellar response of some major tourism players in the treatment of their employees, we predicted that the sector would be challenged to find workers who were enthusiastic and driven to be high performers, when so many employers treated labour as a disposable item.
Governor Greenidge stated: “The unemployment rate declined from 9.3 per cent in the second quarter of 2022 to 8.5 per cent by the end of the same period in 2023. Employment in the wholesale and retail trade and the transport and communications sectors rose relative to the same period last year, with the improvement in overall economic activity.”
With an economic turnaround that is anchored on tourism, it is instructive that hirings in tourism were not identified by the governor among the sectors that led the employment jump.
Of importance also from the most recent economic update was the disclosure that the government still recorded a primary surplus of $274.9 million (2.1 per cent of GDP), with a target of $218 million, and an overall fiscal deficit of $61.1 million.
Furthermore, the island’s credit quality continued to improve while capital adequacy and liquidity ratios remained high.
The upcoming Crop Over Festival, now in its 50th year, is expected to provide more impetus for the economy during the traditionally slower tourism arrival period.
In the face of the extremely good news for the administration, it must be disconcerting, at the same time, that the public’s state of worry remains with the high cost of living.
It has become more than a major headache. Even before the conflict in the Middle East or the war in Ukraine, Barbadians have been deeply concerned about their ability to live and thrive in an environment where their level of disposable income has been severely eroded by inflation.
In his commentary on the most recent economic review, University of the West Indies Professor Justin Robinson made some valuable comments on the matter of inflation and its impact on Barbadians.
While he reinforced the missive of the governor about the strong economic performance, he cautioned: “The economy continues to be buffeted by declining but stubbornly high inflation which may be eroding the spending power of a broad cross-section of society, and rising foreign debt service costs which are impacting negatively on the public finances.”
On the question of sustained growth, Professor Robinson seeks to alert Barbadians that we cannot rest on our laurels.
“The 4.1 per cent growth reported is therefore a solid rather than spectacular achievement and suggests that first quarter growth is reverting to historical levels after the extreme COVID-19 shock which saw first quarter real GDP growth of negative 18.9 per cent.
“The challenge of finding new growth catalysts to sustain growth remains as the economy moves past the post COVID-19 pandemic rebound.”
As we indicated earlier, the academic also had some concern and called for closer examination of the employment stats.
He points out that the 7.9 per cent unemployment rate reported was significantly lower than the average of 12.11 per cent for Barbados over the period from 1976 to 2023.
“In terms of a deeper analysis of the labour market, it would be useful to have data on the labour force participation rate (is the drop in the unemployment driven primarily by new jobs or persons exiting the labour force) and some indications on the quality of jobs being created.”
Overall, there is much to be pleased about regarding the island’s economic performance so far, but sustaining that growth is critical.
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