CARIBBEAN ECONOMIES CONTINUED their modest recovery in 2016, and despite some deceleration in tourism growth, economic activity continued to expand across most markets, according to CIBC FirstCaribbean Bank’s chairman David Ritch.
Writing in the bank’s annual report for fiscal 2016, during which FirstCaribbean had been able to build on what he called “the synergies created by the 2013 to 2015 restructuring programme,” Ritch said it had produced a net income of US$143.3 million for the year.
This was an improvement of 46 per cent over its performance in fiscal 2015, when FCIB recorded net income of US$97.9 million.
Ritch said regional unemployment, while still high, continued to trend downward, and some markets, which previously experienced near-zero economic growth – Barbados and Jamaica specifically – have recorded economic growth in excess of one per cent so far in 2016.
In fact, the Central Bank of Barbados is hoping for growth in 2016 of 1.4 per cent, while the IMF has reduced its 2016 projection for Barbados from 2.1 per cent to 1.7 per cent.
Now, with the general election due by early 2018, we can expect the political rhetoric to heat up as 2017 progresses. With elections around the corner, it is unlikely that the Government would want to reduce or “rationalise” any of its statutory corporations, as it had promised to do almost immediately on winning a second term. Unless it has to go to the IMF, as that would undoubtedly be the first thing required of it.
Our little tourist economy – on which we rely solely for our economic life – has recovered thanks to the good work of the tourism authorities, but even the Minister of Finance has said that tourism alone will not be able to produce a full economic recovery. The Government must reduce spending as well, he said.
But it is hard to do retrenchment when you are looking for votes.
However, the most immediate economic challenge we will face in the new year is the probable rise in oil prices to somewhere between US$55 and $60 per barrel, thanks to the deal finally agreed by OPEC’s member countries and several non-members, including Trinidad & Tobago and Russia, to cut production.
Average prices for WTI and Brent crude have already started to go up, and this was almost immediately reflected in increases in local prices for fuel.
Apart from consumers and businesses paying more for that essential commodity, which helps drive inflation, higher oil prices will hit our reserves. If they go past the above noted estimates and somehow jump to US$80 per barrel on average, for example, we can expect trouble in the economy.
And, finally, we can’t expect Barbados to suddenly become immune to the challenges facing the offshore, a.k.a. the international business, sector. We can rail against the system and cry that how we are neither the biggest offenders nor players, and we can promote ourselves, as we do, as a low-tax jurisdiction, but we are all tarred to a large extent with the same brush.
We just got the No.13 spot in Oxfam’s list of worst offending offshore locations. And we have also fallen several notches in the rankings of the best places to do business.
Looking forward, let me echo Ritch, who said CIBC FirstCaribbean was approaching 2017 with “the same cautious optimism and determination to excel as in previous years”.
I think that is a good philosophy for Barbados to adopt, no matter who is running the country.
And as this is my last column for 2016, may I wish you and yours all the very best for a happy and prosperous 2017.
Patrick Hoyos is a journalist and publisher specialising in business. Email: pathoyos@gmail.com