Tuesday, April 23, 2024

Economy at risk of stagnation


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BARBADOS’ CONTINUED HEAVY DEPENDENCE on tourism is putting it at risk of “consistent economic stagnation”. Last week, as Central Bank Governor Dr DeLisle Worrell was reporting that tourism’s “stellar” performance last year was the main reason the Barbados economy grew by 0.5 per cent, international publication Global Risk Insights simultaneously warned that more needed to be done to reduce the reliance on tourism.

An article authored by Devesh Rasgotra from the International Insitute For Strategic Studies, stated: “Barbados is not necessarily on the brink of an economic crisis but is at risk of consistent economic stagnation if the current trend of relying on tourism continues.”

“It is the addition of innovation and the development of companies in other economic sectors that will drive the country’s growth in the future.”

Rasgotra asserted that “tourism remains an unstable source of growth”, said there was “lack of confidence in Government policy”, and “economic innovation continues to elude”.

Commenting on what he said was a tourism problem, he said, “The difficult at hand for Barbados is two-fold. Firstly, even though it frequently attracts many of the wealthiest tourists, this has not translated into strong, consistent growth.

“This is due to the concentration of tourism spots on the southern and western coasts, which has meant that the development of the island tends to be quite varied.

“The regions of St James and St Peter accommodate the wealthiest tourists. However, due to low population density and lack of urban areas, the investment from the tourism is not felt by the local population. Moreover, more populous regions such as St Philip receive less tourism and subsequently less investment.”

He also said “some of these tourists are now turning away from the country”, which he attributed to “the rise in luxury hotels in the country which are pricing out a number of visitors”.

“This has been coupled with more taxes and fees on international visitors to the island. Tourists are now seeking alternative destinations”.

The report also asserted that there was “a lack of belief in the Government’s economic policy”.

“In fact, criticism has compared the Government’s policy to that of a plantation economy.

“The standard definition of a plantation economy is an economy reliant upon the exportation of agricultural products . . . . The modern criticism of the Government in this regard is that Barbados is now reliant on the exportation of tourism services to wealthy Western clients.”

The article also made other statements about the impact of Government policy. It said Government “believes the amount of wealth that Barbados can create is a finite amount” and hence “Barbados needs the foreigners who visit the country as they create the additional wealth apparently needed”.

“However, this view is too narrow and adversely impacts those in other sectors of the economy.

“This has led to an erosion of confidence in the Government, which in turn has caused a lack of consumer spending.

“Moreover, local businesses have been reluctant to invest and generate jobs and subsequently growth,” Rasgotra added.


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