Too little too late?
The Honourable Minister of Finance, Christopher Sinckler, presented his third budget against the backdrop of impending elections and in the context of a fragile Barbados economic recovery. In this most challenging global economic environment in generations, the Minister was swift to highlight some constructive developments in the fiscal affairs of the country achieved by his Government. These included the island’s positive first quarter economic growth, and improvements in our current account deficit.
Counterbalancing these glimmers of hope, the Minister was forced to acknowledge that stubbornly high unemployment rates continue unabated, inflation remains above any reasonable medium term target and the economic outlook remains one of tepid growth and continued deficit spending. Faced with these multiple threats the Minister attempted to articulate a balanced course between growth and austerity constructed around a mixture of traditional and novel fiscal measures.
The Central Bank of Barbados’ 2012 first quarter economic review characterised the performance in the economy as stable with marginal growth. However, we believe that growth will continue to be sluggish given the weakened tourism sector and the need for Government to implement sharper cuts to fiscal spending. Tourism continues to be a major driver of economic activity, contributing 12% of GDP in 2011 and approximately 40% of the Island’s total foreign exchange earnings. While the review for the first quarter signals increased tourist arrivals; shorter stays, reduced spending and declining cruise ship arrivals have reduced the current account inflows from the sector…