Presented by Winston Moore on June 30, 2010
Most economists in Barbados work in policymaking institutions such as Government Ministries as well as the Central Bank of Barbados. Given their experience and understanding of the local economy attained at these institutions, their views and opinions can provide valuable insights into the current performance as well as future prospects for the economy.
The BES Survey of Economists’ Expectations has become a traditional part of these annual general meetings and tend to provide useful insights regarding the future course of the economy.Â In addition to providing the traditional summary or forecasts of key economic indicators, this year’s survey also solicited the views of economists in regards to the future policy direction for the island.
In regards to economic activity, most economists (42 percent) thought that economic activity over the next six months would be flat, 29 percent were of the opinion that activity would be somewhat lower, while 25 percent thought that a modest recovery was likely.Â As a result of the relatively flat expectations for growth, employment, the fiscal deficit as well as the Net International Reserves were anticipated to deteriorate over the next six months.Â Growth in credit and interest rates was anticipated to be flat while inflation was expected to be slightly higher.
In terms of the external factors driving these trends, almost 80 percent of economists expected oil prices to be somewhat higher over the next six months, and potentially fuelling domestic inflation.Â In spite of the anticipated pick-up in activity for the United States of America (61 percent), only marginal growth was forecasted for the United Kingdom as well as CARICOM.
In regards to government’s fiscal performance, the results were mixed: 44 percent were of the opinion that government’s fiscal response was good, while 39 percent thought that the performance was just average (i.e. neither good or bad) while the remainder (17 percent) rated government’s performance as poor.Â Economists were somewhat kinder to the Central Bank, with 65 percent rating the Bank’s response as either “goodâ€ or “very goodâ€.
Concerning the future policy approach, 52 percent of economists thought that the best way to bring the fiscal deficit under control was through expenditure cuts, while maintaining the central bank’s minimum deposit rate at its current level.Â In the longer-term, it was thought that government’s future policy agenda should focus on three main issues: government’s debt burden, job creation and education.
POSTED BY BARBADOS ECONOMIC SOCIETY AT SATURDAY, JULY 03, 2010