WHILE ITS CRITICS, including the Opposition, have said otherwise, the Freundel Stuart Administration has insisted that events outside Barbados are largely responsible for the economic challenges faced in the last eight years.
Prime Minister Stuart himself addressed the issue in January 2014 during a speech at a Barbados Chamber of Commerce and Industry luncheon. He said contrary to what people in “some quarters” said, recessions were not new to Barbados. He noted that island “experienced economic recessions between 1974-76, 1981-1982, and 1990-1993”.
Stuart stressed that a common factor of those recessions was that they negatively impacted Barbados because its main trading partners, the United States, the United Kingdom and Canada were themselves victims of the fallout.
In such circumstances, he added, it was clear that the economy had long been constrained by international events.
“The economy of Barbados has been structurally integrated into these economies from as far back as the 17th Century in the case of the United Kingdom and the 18th Century in the case of British North America in which I include the United States and Canada,” he told the business community.
“Predictably, therefore, once these countries went into recession, Barbados was adversely affected and by 1975, unemployment in Barbados was 22.5 per cent and inflation was running at 40 per cent. Not even the great and revered Errol Walton Barrow was able to avert that consequence.
Stuart said in this context, criticisms of Minister of Finance Chris Sinckler were “unjustified, unreasonable and going against the grain of Barbados’ post-Independence economic history”.
Commodity prices kept low
In its recent 2015 review and 2016 forecast, the Caribbean Development Bank said: “The Caribbean economy experienced a difficult year in 2015, on the back of difficulties in the global economy. Global economic growth fell from 3.4 per cent in 2014 to 3.1 per cent. The main reason was the slowdown in China, which along with other events kept commodity prices low, impacting exporters of those products.”
“Growth in the United States, United Kingdom and Canada was revised down during the year, with only the US showing higher growth than in 2014. Being small open economies, Caribbean countries were not immune from these effects. The commodity producing countries saw sharp falls in growth. On the other hand, for those economies reliant on tourism, it was a relatively good year.”
The CDB said: “Clearly, the region’s vulnerability has had an adverse impact on sustainable growth; and this needs to be addressed.” It added, however, that there were things the Caribbean could do to help itself, including fixing low productivity, and the lack of competitiveness.
Any objective assessment of the issue would suggest that while international economic events have impacted the economy, and are likely to continue doing so, there are things within the country’s power to improve, including how it is managed.
All of this is important considering latest forecasts showing that the world economy will continue to be challenged this year.
Speaking last week in Washington DC at the World Bank Group/International Monetary Fund Spring meetings, World Bank Group president Jim Yong Kim said: “We just downgraded our global growth forecast this year from 2.9 per cent to 2.5 per cent. In this period of global economic slowdown, we’re also facing major global challenges: forced displacement, climate change, and pandemics.” (SC)