The International Monetary Fund (IMF) recently released a statement on the Barbados economy which has caused some Barbadians to sigh with relief. Central Bank Governor Delisle Worrell was also also full of glad tiding in April when he forecast the economy to grow 2% during his Review of Barbados’ Economy for the First Three Months of 2011. Why is BU not as optimistic?
Is it not ironic suggesting growth for an economy which relies heavily on that of the United States? The US legislature is currently debating whether to raise its debt ceiling to 16 trillion dollars! Following close behind the US is the UK government who has committed to cut 600,000 government workers over a three year period. How can we be so confident about growth when the two main markets we rely on for inflows of tourist, foreign direct investment and remittances continue to struggle? What growth the US has managed to achieve in the last year is what the economists refer to as jobless growth.
Given the prevailing economic uncertainty one might have reasonably expected our intellectual cadre of professors at Cave Hill, to have come to the assistance of ordinary Barbadians, and provide an unbiased and reasoned interventions to demystify the economic gobbledygook we are being fed. No such luck. Instead what we have had to ‘processed’ is an attack on the credibility of the information presented by the Central Bank of Barbados in its periodic updates to the nation. The Central Bank of Barbados has always held the respect of both sides of the political spectrum in Barbados. This is our first recollection of any Governor of the Central Bank attracting the kind of attack delivered with the fierceness as we are witnessing from former Prime Minister and Leader of the Opposition Owen Arthur and former Central Banker, economist and Arthur’ s right hand man Clyde Mascoll. They have both vehemently dismissed the view posited by Governor Worrell that the economy has grown.
At the crux of the puzzle if you follow BU’s layman interpretation:
If nominal GDP (gross domestic product (GDP) figure that has not been adjusted for inflation) fell in 2010, and if prices were rising it means that real economic growth also fell. Against the foregoing how is it Barbados can report economic growth? In January when the government reported 0.3% growth that was based on an estimate. To be honest BU has become irritated at the carving up of the statistics and analysis to obfuscate ordinary public. What about the intelligentsia on Cave Hill? Had a peek at the Barbados Economic Society blog to make sure we had not missed any elucidation on the mystery of Barbados’ economic performance in the first three months of 2011.
BU will leave it up to the economic gurus to bang each other on the heads about who is right or wrong about the numbers. Here is what we know. If there has been some manufactured easing of the global economic conditions then it stands to reason that Barbados will benefit from a few more tourists visiting the island, increase in FDI and remittance inflows because a few more people feel a little more confident. Does it mean however that our debt to GDP ratio does not remain North of 100? Does it not mean that we are spending more than we are earning on Current Account? Does it not mean that we are flogging the same economic fundamentals which have served us well for the last 30-40 years? What is the status of our renewable energy program? On a related note it is ironic that President Barack ‘Clean Energy’ Obama gave the approval last week to ‘drill baby drill’ in Alaska and the Gulf.
There are facts and then there is the truth. To sensible Barbadians the truth is how long we can continue to withstand the boom and bust cycles which are approaching of late with increasing frequency. Wholly dependent on a fossil based economy in times when cheap oil is a thing of the past. We are given to understand we are at the tail end of the last recession described as the worst since the Great Depression. It has destroyed the wealth of developed nations and heaped more debt on developing nations. Developing nations have no choice but to turn cap in hand to the IMF, World Bank, IADB and other international financial institutions; all controlled by the developed world.
While our economists argue about whether we have nominal or 2% growth, it seems to pale in insignificance when we view the big picture.