Central Bank Of Barbados 3rd Quarter 2009 Economic Review

Outgoing Central Bank Governor gave her last economic review for the first three quarters of 2009.

Dr. Marion Williams

Barbados economy declined by 4.4 per cent during the first three quarters of this year.Central Bank Governor Dr Marion Williams believes the economic slide will not stop by year-end but it should certainly slow with a possible recovery late next year.

Speaking yesterday at the Tom Adams Financial Centre, Church Village, The City, where she delivered her last economic review as head of the bank, Williams said declining tourist arrivals triggered the reduced activity in the island’s traded and non-traded sectors.

Reporting on the performance of various sectors, the economist said Barbados’ main foreign exchange earner – tourism – had suffered an 11.4 per cent decline in long-stay arrivals up to September.

Canada was the only major source market showing increased arrivals, with long-stay tourists from that country jumping by 11 per cent.

The manufacturing sector was hit hard by the recession, plummeting by 11.8 per cent.

The construction sector, on which the island depended in recent years to generate economic activity, dropped by 16.4 per cent.

According to the Central Bank governor, the tight credit conditions internationally that brought a number of tourism-related projects to the standstill hampered growth in construction.The agricultural sector offered some positive news as growth was recorded in sugar and non-sugar agricultural and fishing growing by 1.2 per cent and 1.7 per cent respectively.

“The slowdown in economic activity had a negative impact on employment levels as reflected in an unemployment rate at the end of June 2009 of 9.9 per cent compared to 8.6 per cent at the end of June 2008,” the Central Bank boss told the media.

When it came to the financial sector, Barbadians’ slowed demand for credit changed little, while deposits in commercial banks were relatively unchanged over the first three quarters of the year.

But Williams said the lacklustre demand for credit, despite the incentives offered by lower interest rates, was “consistent with waning economic activity.”

Over the period, Government’s fiscal deficit reached $525.3 million, up from $374.2 million for the first nine months in 2008.

When it came to the island’s foreign reserves, Barbados ended up with a gain of $241.6 million at the end of September due to an International Monetary Fund allocation of approximately US$90 million and Government borrowing on the Trinidad and Tobago market. The Central Bank governor’s outlook is for the economy to decline by four per cent by year-end and for unemployment to rise.

“All sectors that provide ancillary services to the tourism sector are therefore anticipated to experience negative growth,” she pointed out.

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