Central Bank of Barbados claims Bajan economy stabilised for 2011
The Central Bank of Barbados said government must strictly adhere to the targets of its Medium Term Fiscal Strategy to maintain the economic stability achieved in 2011.
That plan is designed to achieve a balanced budget by 2016/2017.
The bank, in its economic performance review for 2011 and prospects for 2012, stated that the fiscal deficit was down more than two per cent of GDP from the previous 7.4 per cent for the latter nine months of last year, in line with the revised strategy targets.
The economy grew by an estimated at 0.5 per cent last year aided by increases in construction (4.4 per cent), tourism outputs (0.3 per cent), and transport and communications sectors (0.6 per cent).
The United States and United Kingdom markets rose, while the Barbados-based low-cost airline REDjet boosted arrivals from the CARICOM region led by a 35 per cent increase the Trinidad and Tobago market.
“Tourist numbers have increased, but length of stay and average spending have fallen, leading to an increase in tourism output that was marginal, at 0.3 percent,” the bank stated.
It noted that Barbados’ tourism remains competitive because the country is known as a high quality destination, adding, “In order to maintain a competitive edge in tourism, the industry must attain and maintain international standards at all times.”
The Central Bank called for further investment in refurbishment and upgrades of hotels and tourism facilities, including the cultural and historical legacy of the country.
Foreign exchange spending of BDS$5.5 billion (US$2.75 billion) was financed almost entirely from tourist inflows, earnings from the International Business and Financial Services sector, exports and capital inflows.
“As a result there was a minimal need to draw on the Central Bank’s foreign exchange reserves, which fell by only 1 percent between the end of 2010 and December 2011,” the bank explained.
“The Barbados currency remains well protected, with foreign reserve cover of 18 weeks of imports at December 2011, comfortably above the international norm of 12 weeks.”
Growth prospects for 2012 are tempered by the unsettled international climate, while the medium term growth prospects are encouraging, once the international economy settles down, the bank said further.
“The growth rate in 2012 may be one per cent or less, unless the international economic and financial climate improves. Construction of tourism facilities and Government’s housing initiatives are expected to be the main drivers,” it explained.