The economy barely grew in 2021, but the Central Bank of Barbados is predicting a double digit expansion this year if all goes well.
An improved employment situation and better financial performance by Government are also on the cards, Governor Cleviston Haynes said today as he reviewed the economy’s performance last year and gave his 2022 forecast.
The Central Bank estimates that the economy grew by 1.4 per cent, including an 11.5 per cent expansion between October and December as tourist arrivals reached 47 per cent of the corresponding pre-pandemic level of 2019.
He said the “modest growth” for the whole year “reflected in private sector spending, but the continued depressing effect of COVID-19 on the tourism sector and on private sector investment tempered the extent of the recovery”.
“The steep fall in arrivals in the first quarter following the 2020 end-of-year spike in domestic COVID-19 infections outweighed the gradually improved performance over the last three quarters. The overall decline for the year was 26 per cent and arrivals were only 20 per cent of 2019 levels,” he explained.
Outside of tourism, the other main foreign exchange earning sectors fluctuated.
“Manufacturing output grew by four per cent, principally the result of higher production of food and beverages. Agriculture output declined by four per cent percent, in part the result of the on-going effect of COVID-19,” the Governor reported.
There were improvements in the wholesale and retail, business and other services sectors, while construction activity stabilised in the second half of 2021 after previously being negatively affected by the lockdown early in the year and the volcanic ashfall.
The economist also said that the labour market “remains soft, but there was evidence of improvement towards the latter half of the year”.
He referenced the Barbados Statistical Service which estimated that more than 13 000 people “gained employment in the twelve-month period ending September, as the participation rate rose to 62.3 per cent, compared to 58.9 per cent a year earlier”.
Prices were high in Barbados last year, and Haynes attributed this mainly to higher import costs.
Barbados gross international reserves increased by $398 million during 2021 to end the year at $3.05 billion.
This was mainly on account of “policy-based borrowing from the multilateral financial institutions and the proceeds of the new special drawing rights allocation by the International Monetary Fund”.
The Central Bank’s information also showed a partial recovery in Government’s revenue, which expanded by $116 million during the first three quarters of the fiscal year – April 1 to December 31, 2021.
Government’s spending increased by $314 million “as Government sought to address the challenges posed by COVID-19 and the climatic events that impacted the island during the financial year”.
Regarding debt, Haynes said there was improvement “principally because of the fall in GDP, stabilised on the strength of the emerging recovery in economic activity”.
“At year-end, the public debt ratio was equivalent to 136.3 percent, 0.3 percentage points lower than at the end of 2020,” he reported. (SC)