Sunday, April 14, 2024

Big economic decline in first quarter

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Barbados’ economy contracted by nearly 20 per cent as tourist arrivals virtually vanished between January and March.

Governor Cleviston Haynes reported this in his first quarter economic review this morning and said the outlook had worsened.

The Central Bank of Barbados, which in January forecast the economy would expand by just under five per cent, now expects growth to be as little as one per cent.

Haynes attributed the 19.8 per cent decline, which was the fourth consecutive quarter of economic downturn, to a 96 per cent slump in visitor arrivals.

With the intake from tourism down, the Governor said there was an $86 million reduction in the foreign reserves. Government also spend more foreign exchange on debt repayments and to purchase COVID-19 vaccines.

However he said this was not a major worry as Barbados had the “buffer” of $2.6 billion in reserves.

Unemployment remained a concern in the first quarter.

“With renewed dampening of economic activity, there were over 6 000 more unemployment claims than for the first quarter of 2020, principally from business and other services, tourism and the wholesale and retail sectors,” said the Governor.

Some of the applicants were not eligible because they had not made enough contributions since using up benefits last year.

Haynes said uncertainty continued to cloud the economic outlook, and stressed that recovery still hinged on a big tourism industry rebound.

“The eventual outturn for 2021 will be influenced in large measure by the country’s ability to contain the domestic spread of the [COVID-19] virus and by the timing and pace of the resumption of activity in the tourism sector,” he elaborated.

“As more individuals are vaccinated both locally and abroad, international air and cruise traffic is expected to resume gradually, boosting demand for ancillary services. The impact of the ongoing volcanic eruptions and resulting ash falls on growth is likely to be muted but downside risks remain from future major eruptions,” he added. (SC)

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