A TRINIDADIAN INVESTMENT FIRM with operations here has given Barbados a “negative” outlook in light of concerns about “the trajectory of the fiscal accounts and pace of debt accumulation”.
First Citizens Investments Services, in a July report authored by research analyst Kris Sookdeo, said while Barbados’ inflation monetary policy was “stable”, other fundamentals including economic outlook, trade balance/balance of payments, fiscal accounts, and credit ratings were all “negative”.
“While the present administration is making an attempt to improve Barbados’ fiscal status, consolidation and weak competitiveness will continue to hamper Barbados’ economic recovery,” Sookdeo concluded.
“There have been signs that the ability to borrow in the domestic market at low rates is diminishing and access to external markets has been affected by successive downgrades. With the outlook still weak for the European economy, some weakness is expected in the tourism sector of Barbados during 2015.
“That said, the surge in foreign capital during 2014 could indicate that the industry is set for a recovery in late 2015. Foreign currency reserves have declined substantially with import cover now at 14.6 weeks. As a result of this and based on the trajectory of the fiscal accounts and pace of debt accumulation, First Citizens Research & Analytics holds a negative view on Barbados,” he added.
In the case of the stable inflation grade, the First Citizens analyst said “inflation measured 1.4 per cent at the end of April 2015 attributed to low commodity prices. The average annual unemployment rate at the end of March 2015 rose to 12.7 per cent, from 11.7 per cent a year earlier, largely because of job losses from the fiscal consolidation programme”.
Meanwhile, in an economic alert issued following the recent release of the Central Bank’s half year economic report, the firm said: “We remain cautious on Barbados’ economic fundamentals, and will continue to monitor the fiscal accounts and the level of foreign exchange reserves.”