20/20 helps ease economic pain

THE ICC WORLD TWENTY/20 cricket tournament rescued the local economy from an imminent decline in long-stay tourism arrivals but was not enough to improve foreign exchange reserves.Yesterday Dr DeLisle Worrell, Governor of the Central Bank of Barbados, made this revelation as he released his review of the half-year performance of the economy on the Bank’s website, which indicated a 1.0 per cent drop in overall economic growth and a $68 million decline in reserves.He said the island had 19.3 weeks of import cover, much more than that recorded for the prior period, and that although visitor numbers increased tourism revenues were under par and failed “to provide the usual first-half boost in foreign exchange reserves during 2010”.“The hosting of the World Twenty/20 Cricket Tournament in May boosted arrival numbers sufficiently to turn around what would otherwise have been a contraction in long-stay visitors in the first half of the year,” Worrell noted.He said increased long-stay travel was also stoked by higher numbers from the United States and Canada, influenced by Government’s marketing alignment with various air carriers.Cruise arrivals, driven by North American cruise business, rallied to a modest increase of 4.7 per cent in tourist days, which Worrell explained was the number of tourists multiplied by the average number of days each visitor usually spent here.However, a generally fragile British market and a slump in arrivals from CARICOM, with the exception of Trinidad and Tobago, undermined the performance of tourism in the first six months of 2010, the Central Bank Governor said.Tourism lightThose tinges of colour in the tourism sector complemented bright hues of a steady 3.3 per cent inflation rate calculated for 12 months at the end of March, reduced deficit of 8.6 per cent from 10.2 per cent, and 10.5 per cent increase in value added tax compared to the first five months of 2009.The pleasing aspect of Barbados’ economic picture also featured a 10.4 per cent drop in transfers and subsidies, a 6.0 per cent cut in Government’s wages bill, a 14.6 slash in Government purchases and liquidity at banks that featured cash reserves equivalent to 7.5 per cent of deposits, which was 2.5 per cent percentage points above that stipulated by the Central Bank.Other segments of the economy were dismal, characterised by unemployment at 10.6 per cent for the first quarter of 2010, up from 10.1 per cent at the end of the first quarter of 2009; decline in construction, weak demand for domestic goods and services and the largest jump in foreign payments owing to foreign debt service, and a rise in the value of imported oil and other intermediate inputs.Higher capital inflows compared to the 2009 half-year statistics and greater interest of potential buyers in high-end properties did not convert into tangible increases in real estate sales, which “remained well below the pre-recession highs of 2007”.Worrell pointed out that foreign exchange earnings from sugar were down 20 per cent, output in the manufacturing sector dropped about 7.7 per cent, new registration of international business and financial companies was halved and there were slight rises in utilities. (SR)