So the Central Bank of Barbados has not revised its forecast of economic growth for 2011 after all. According to a spokesman for the bank at a recent private sector gathering, the forecast for this year is the same figure that it was when first announced by the bank in January.
The economy’s performance is measured on a quarterly and annual basis; so a month’s data on tourism for January cannot change the forecast for the year.
The tourism sector contributes to growth in the economy through the number of visitors and the length of stay of the visitors; and not as many believe by how much they spend. What the visitors spend influences the country’s foreign exchange position and this is ital especially in the current economic circumstances. This is simplistic, for obvious reasons, but true!
The region as a whole seems to be benefitting from the recovery in the United States which is not robust, and the extraordinarily cold winter in the north. So it is possible that the marketing is working but it must be admitted that the industry is not receiving the kinds of room rates to which it is accustomed during a typical winter season.
In a recent attempt to upstage the opposition’s planned press conference, the Minister of Finance Chris Sinckler went on a media-frenzy with the news that the Barbados economy grew by a revised 0.3 per cent for 2010 up from an original estimate of 0.4 per cent negative growth or decline. This new figure may still not be the final figure!
In addition, Minister Sinckler suggested that “the Central Bank is now said to be revising its economic growth projection for the first three months of 2011, upping it from two per cent to 2.5 per cent.” It is fascinating that the minister said that the bank is now revising the figure, yet he was able to put a figure in the public domain at the time. Having had so little positive to report on the economy and having reversed himself on several of the policy positions since becoming Minister of Finance, it is understandable why Sinckler would have been excited by the improved arrivals for tourism in January.
However, the proof of the pudding in the tourist arrivals would be reflected in the foreign reserves position of the Central Bank of Barbados at the end of January/February and certainly by the end of March/April. The foreign reserves would have been boosted by the sale of the National Insurance Board’s shares in the Barbados Light and Power and it would therefore be difficult to determine tourism’s contribution to the foreign reserves for the month of January 2011.
All around the world, economic data, indeed, all kinds of data, are projected and revised, so there is nothing wrong with putting a new figure in the public domain by the same institution that prepared the forecast in the first place, which in this case is the Central Bank of Barbados. But there is definitely something wrong with giving the impression that economic analysts knew about a revised figure when it was not published and before it was actually revised.
Only the nascent Minister of Finance has such capacity.
There will be no attempt by me to pour cold water on the Government’s or any institution’s forecast.
What matters most is that the public be made aware that if I gave one-third of a cent to a vagrant on Broad Street who confessed to me that he had a dollar in his pocket; then I may describe my act as charitable. But it certainly cannot be said that I transformed the vagrant’s life in much the same way that a 0.3 per cent growth in the economy is a move in the right direction but not a spurt.
A spurt is a short burst of growth which 0.3 per cent cannot be, but more important economic growth now has to be sustainable in the prevailing circumstances in Barbados.
