Review of Barbados’ Economic Performance for the First Six Months of 2012

{FILE IMAGE} The fiscal deficit was estimated at 5.1 percent of GDP for the first three months of the 2012/13 fiscal year. Government’s total revenue is projected to have improved by 3.4 percent, compared to the same period last year, primarily owing to a 7 percent increase in VAT receipts. On the other hand, personal tax collections were down by 5 percent, while corporate tax receipts fell by 4 percent. Expenditure on interest payments grew by 5 percent and pensions and other transfers to individuals and to public corporations rose by 20 percent and 12 percent, respectively.

Barbados’ foreign exchange reserves at the end of June stood at $1,357 million, a decline of $63 million since December 2011. This level of reserves is no lower than the amount recorded at the end of 2008, the year the industrial economies fell into the worst recession in recorded memory. As expected, the international recession has slowed the inflows of foreign exchange to Barbados, and has therefore limited the prospects for growth in an economy which needs foreign exchange in order to register sustainable growth. The recession in the industrial world has been compounded by the European economic and financial crisis, further containing foreign investment in emerging economies like Barbados. As a result, real growth in the first half of the year was estimated at 0.6 percent.

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