The Barbados economy is in a unique position, and not in a good way.
A new Caribbean Economic Performance Report issued by the Caribbean Centre for Money and Finance (CCMF) concluded that the island was worst off in context of the region’s economic performance.
In the 70-page report the Trinidad-based organization headed by former Caribbean Development Bank president Professor Compton Bourne used International Monetary Fund information to back up its assertions.
The CCMF said Barbados “is the only country projected to decline in 2013, with a 0.8 per cent fall in GDP”.
“The economic growth prospects for Caribbean economies in 2013 are more favourable than the experience of 2012 when many ECCU [Eastern Caribbean Currency Union] member countries and Jamaica regressed. The International Monetary Fund projections are that in 2013 The Bahamas, the ECCU and Jamaica will grow within a range of zero per cent to two per cent, with ECCU members Grenada and St Lucia together with Jamaica being at the lower end of the range,” the report said.
Belize and Haiti will grow at 1.6 per cent and 2.8 per cent respectively. Growth in Guyana and Suriname will be faster at 5.3 per cent and 4.7 per cent, respectively. Barbados is the only country projected to decline in 2013 with a 0.8 per cent fall in GDP. The International Monetary Fund expects even stronger economic growth performance in 2014 in The Bahamas, Belize, Guyana, Haiti, Jamaica and Trinidad and Tobago. The economic growth rate is forecast to become slower in Suriname and be a larger negative in Barbados,” it added.
The regional institution said the worst off prediction for Barbados was the result of a contraction in economic activities here.
“The main foreign exchange currency-earning sectors, that is, tourism, international business and financial services, contracted for this period. Tourism in Barbados continues to underperform; its output was reported to have declined by 1.4 per cent for the first half of 2013,” it noted.
“Manufacturing output was virtually flat, following a seven per cent contraction between 2011 and 2012. No improvements were recorded in any of the sub-categories in manufacturing for January to June 2013.
“This sector continues to be affected by persistent weak demand in both the domestic and external markets. The construction and agriculture sectors also remained depressed in the first half of 2013. This slowdown in economic activities seems to be prevailing throughout 2013, as indicators of economic activities as at September 2013 suggest this.”
The report also referred to information showing a decline in bank profitability in Barbados and reduced credit quality.
“Credit quality continued to decline ,as indicated by an increase in the ratio of non-performing loans to total loans from 12.31 per cent in end-June 2012 to 13.9 per cent in end-June 2013. This also compromised bank profitability,” the CCMF said.
“The Central Bank of Barbados noted that the weakening was mainly in the personal mortgage and real estate portfolios. Notwithstanding declining profits and loan quality, banks remained well capitalized for the first six months of the year. The capital adequacy ratio was 21.47 per cent at end-June 2013, 200 basis points above the ratio at end-June 2012.”
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