The Barbados economy registered its fifth consecutive quarter of growth between April and June, but the expansion, though vibrant, was weaker than in the first quarter, the Governor of the Central Bank of Barbados, (CBB), Cleviston Haynes said Wednesday.
In a review of Barbados’ economic performance in the first six months of 2022, Haynes said the growth for the first half of the year remained in double-digits and the recovery is mainly reflective of the rebound in tourism activity and there were also modest gains in manufacturing exports and domestic spending.
He said the external economic environment remains extremely challenging and the impetus for a sustained economic recovery persisted into the second quarter of the year as a slightly better than forecast rebound in tourism propelled the economy by an estimated 10.5 percent over the first half of 2022.
“Tourism-related activity has not yet returned to pre-pandemic levels, but the easing of the protocols opened the way for increased domestic spending and enabled the labor market to show signs of a return to near normality.”
But Haynes said on the downside, inflationary pressures originating abroad were felt in the domestic market, raising the risk of a dampening of growth prospects.
He said the Russia-Ukraine conflict continued to compound an already difficult environment for the cost and shipment of goods and commodities arising from the coronavirus (COVID-19) induced supply chain bottlenecks.
Haynes said going forward, the domestic macroeconomic environment will continue to be affected by the global instability as the surge in global prices has intensified short-term growth challenges associated with the pandemic.
He said the policy response of raised interest rates in industrialized economies has created fears of a new recession and the International Monetary Fund has tempered its global growth forecast in light of this uncertainty.
“The continued strength of Barbados’ recovery remains dependent on a sustained revival of the tourism sector and the accelerated implementation of investment projects,” Haynes said, adding that forward tourism bookings for the remainder of the year are encouraging, as travelers reschedule their COVID-19 postponed trips.
He said the anticipated opening of the Wyndham Sam Lords property is expected to boost demand towards year-end.
But the Central Bank Governor reminded the country that “significant downside risks remain.
He said price-sensitive sectors like tourism and manufacturing if faced with higher costs of inputs and lower demand for their products for prolonged periods, may attempt to reduce operating costs through staff layoffs.
CMC/
