Has the economic debate in Barbados become too politicized?
GIVEN THE CHALLENGES in Barbados’ economy over the past few years, Barbadians are looking for signs that the country’s economic fortunes are improving.
It would therefore have been welcome news in February when Minister of Finance Chris Sinckler reported that revised figures showed the economy had grown 0.3 per cent by the end of last year and had not contracted by 0.4 per cent as believed earlier.
According to the February 13, 2011 SUNDAY SUN, the Central Bank of Barbados was so confident that the improvement would continue that it was planning to revise its economic growth projection for the first three months of 2011 from two per cent to 2.5 per cent.
Sinckler said the improvement was based on significant increases in tourist arrivals in January from almost every market, including Britain, which jumped ten per cent.
Clyde Mascoll, Barbados Labour Party spokesman on the economy, took exception to this.
He noted that if Central Bank Governor Dr DeLisle Worrell reported in January that the economy had contracted but then in February reported “paltry” economic growth, this spoke to “the comment by the Governor of the bank with respect to the bank’s forecast being no better than that of a fortune teller”.
Mascoll told the February 14, 2011 DAILY NATION that even if the Barbados Central Bank’s economic growth projection for the first three months of 2011 was revised to 2.5 per cent. “the growth would still be inadequate to close the whopping deficit of $540 million on the Government’s current account”.
The former Leader of the Opposition added that while there was nothing wrong with revising a figure, as is the practice around the world, it was fascinating that the bank was now “upping [the figure] from two per cent to 2.5 per cent” when there already was a known figure of 2.5 per cent.
Mascoll described Sinckler’s comment as “the latest of a series of disturbing comments which . . . reflect a lack of clarity on the issues, an inconsistency of thought and a general uncertainty about the way forward”.
Furthermore, in the April 29, 2011 WEEKEND NATION Opposition Leader Owen Arthur said there was a “mission of propaganda” to make Barbadians feel good about the economy which had declined and not grown.
He said he had information about emergency meetings held in “recent weeks” with the Central Bank, the Department of Statistics and the Ministry of Economic Affairs.
“The Department of Statistics now has information that will show that rather than there having been growth in Barbados in 2010 . . . the economy has declined. . . ,” Arthur said.
Arthur said Barbadians were being fed a diet of misinformation “causing you to feel that all is well and the economy is growing”.
There was also debate over reports of improved results during the winter tourist season and its impact on the economy.
In delivering the Central Bank’s review of the first three months of 2011, Worrell said the winter tourist season had been encouraging, with a significant rebound in tourist arrivals from Britain and the United States.
He said this was the main cause of the growth of real GDP in the first quarter, estimated at 2.8 per cent.
In addition, travel receipts were estimated to have grown by $49 million, seven per cent more than the earnings received during the first three months of 2010.
In the May 7, 2011 SATURDAY SUN, Barbados Tourism Authority (BTA) chairman Adrian Elcock said Barbados’ tourism has recorded an “amazing” performance for the first quarter of the year with visitor arrivals numbering over 211 000 and accounting for 60 per cent of the island’s foreign exchange earnings for the period.
“We have done well. . . . We have been able to deliver over 20 000 more visitors for the period than for the same period last year,” he said.
Based on these results, Elcock projected three per cent overall growth in tourism for the year if current trends continued.
He attributed the increased numbers to “a comprehensive marketing programme in all markets”, with “brand Barbados” being given high visibility everywhere.
However, Mascoll dismissed the Central Bank’s suggestions that improved performance in the tourism sector up to April this year drove economic growth.
According to the May 24, 2011 DAILY NATION, Mascoll called the performance claim “rubbish” and said that based on numbers, there was no way tourism could have improved in Barbados during the first quarter of 2011.
He charged that Government was misleading Barbadians by its use of in transit passengers as the major reason for growth in tourism figures. He noted that an individual staying one day in Barbados would hardly make a contribution to the economy.
The former Government minister said that 2009 figures showed there were “2.5 thousand in transit visitors”. He added that in 2010 there were “3.3 thousand in transit visitors”, and in 2011 that figure increased to “12.7 thousand people”.
The economist stated that of the 21 000 increased arrivals up to April 2011, 13 000 were people who stayed for one day.
Length of stay
“When the Central Bank says that the GDP in tourism has increased, it is because they have measured length of stay predominantly . . . the important thing is that it does not matter where the tourist comes from, but how long he stays and how much he spends,” he said.
He noted that when hotels’ discounting rooms was taken into account, there was absolutely no way that tourism figures could have improved over the first quarter of 2011.
Meanwhile Therese Turner-Jones, chief of an International Monetary Fund (IMF) mission to Barbados from May 10 to 13, said following the global economic crisis, Barbados’ economy was beginning to recover as growth started to pick up in early 2011.
“Real Gross Domestic Product is projected to grow by about two per cent this year mainly due to higher tourist arrivals, signalling the onset of a recovery from the slow growth in 2010 and the two earlier years of negative growth,” she said.