AS A SMALL open economy, it is expected that Barbados would import more than it exported as smallness implies a degree of difficulty in attaining economies of scale and scope (production of a diverse set of goods).
To a large extent, Barbados’ trade performance over the past five years has been consistent with these assumptions.
For the five years from 2008 to 2012, Barbados’ trade deficit with the rest of the world stood at just over $13 billion. During this period, domestic exports totalled just over $2.5 billion while imports totalled over $15 billion.
It is very important to highlight some key features of this data:
• Compared to 2008, there was
a marginal decrease in the trade deficit in 2012 of about 1.3 per cent. Furthermore, between 2011 and 2012, the trade deficit also decreased by roughly three per cent. Therefore, for the last two years of the review period 2008 to 2012, Barbados’ trade deficit has been trending down, albeit marginally.
• Between 2008 and 2009, Barbados’ domestic exports declined by approximately 16 per cent.
This decline can largely be attributed to the negative impact of the global recession at the time on Barbados’ exports. However, since 2009 Barbados’ domestic exports have grown every year and by 2012, exports were almost 35 per cent higher than they were in 2009.
• Barbados’ major exports have generally been medicaments, rum, sugar, medical and surgical appliances, electronic components, margarine, paper labels, aerosol sprays, and sweet biscuits.
Combined, these products account for a significant proportion of Barbados’ exports and foreign exchange earnings.
• CARICOM is the largest market for Barbados’ exports, particularly Trinidad and Tobago and the Organization of Eastern Caribbean States countries. Together, CARICOM accounted for over nearly half of Barbados’ exports in 2012. The other major markets included the United States (19 per cent of exports) and Britain (9.9 per cent).
With respect to imports, the numbers have generally fluctuated since 2008. However, on three occasions between 2008 and 2012, Barbados’ imports were above $3 billion.
• In 2012, gasoline and fuel oils accounted for roughly 25 per cent of the value of Barbados’ total imports. This is also a feature of previous years where these products also accounted for a significant percentage of Barbados’ imports.
• Combined, the United States and Trinidad and Tobago accounted for 58 per cent of Barbados’ imports in 2012. The United States’ share of this figure was 30 per cent while Trinidad and Tobago accounted for 28 per cent of Barbados’ imports.
The above data paint a mixed picture for Barbados’ international trade performance. On the one hand, there is a huge gap between imports and exports, with the former considerably outweighing the latter.
On the other hand, domestic exports have also shown some encouraging signs, with exports growing significantly every year since 2009. This is a clear indication that the “death” of manufacturing in Barbados may have been pronounced prematurely.
We can see a revolution in manufacturing in Barbados to the extent that we can assist our manufacturers to introduce modern technology to produce more of their existing products and introduce new and innovative products, improve product labelling and packaging, sustain and grow market presence in existing markets, and develop new markets.
We must also put mechanisms in place to improve trade facilitation in terms of customs and port procedures and food safety legislation, among other issues.
For the foreseeable future, Barbados would continue to have a trade deficit with the rest of the world as we are unlikely to attain the required economies of scale and scope to reverse this situation.
However, the data presented above suggest that if we were to reduce our dependence on fossil fuels, we can see an improvement in our trade balance with the rest of the world while simultaneously saving significant foreign exchange. Therefore, efforts currently being undertaken at both the level of Government and the private sector with respect to renewable energy must be intensified.
• Joel Richards is a trade consultant to the Barbados Private Sector Trade Team, a division of the Barbados Private Sector Association.