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Economic Factors This segment of the report was compiled from the Analysis of Barbados’ Current Economic Performance dated December 2013 and published by the Central Bank of Barbados (CBB). The review states that the economy of Barbados ‘performed appreciably better during the current economic recession’. “Between 2008, when the current crisis hit, and 2013, the economy contracted by 3 percent in total. In the 1981 - 82 recession the decline was 7 percent, and in 1990 - 93 it was as much as 14 percent.” The CBB noted that Barbados “ranks highest among Caribbean countries”, ranking number 47 in the world in the 2013 - 2014 Global Competitiveness Report. Barbados outperformed its Caribbean and Latin American neighbors “in terms of its infrastructure, institutions, health, education, labor market efficiency, financial market development and technological readiness. It is on par with its peers with respect to goods market efficiency, business sophistication and innovation.” Despite also being competitive in terms of Tourism prices and the prices of its other internationally traded goods and services, the CBB stated that Barbados still experienced “some decline in its share of the Caribbean Market” and suggests that initiatives to promote investment, increase productivity, improve the quality of the product, and to enrich the tourist experience, are the focus of the tourism development strategy.” Barbados’ real GDP contracted marginally by 0.2 percent. There were declines in both the value added by tourism and construction of 1 percent and 12 percent respectively, while non-sugar agricultural output and business and other related services experienced increases of 11 percent and 2 percent respectively.
In discussing the recovery of the economy, the CBB mentioned that past performance and future recovery was hinged on “private investment that improves the quality of Barbados’ internationally traded services, renews our products, and extends our product offering.” Proof of this fact was seen as foreign reserves for 2013 fell by $301 million with foreign capital inflows reaching approximately $499 million; a decline of $188 million. The CBB sited the ‘slump’ in private foreign investments as “the major reason behind the decline in foreign exchange reserves in 2013.” As of December 31, 2013, “foreign reserves were the equivalent of 15 weeks of imports of goods and services.” In discussing fiscal policy, the CBB noted that “the declines in reserves from May onwards signaled the need for fiscal contraction measures”. In August 2013, the Government of Barbados detailed an eighteen month fiscal adjustment package and later on December 13, an 11 percent cut in public sector jobs was announced to further ensure the achievement of the fiscal targets. In outlining the growth forecasts and assumptions, the CBB expects less than 1 percent growth in 2014 with a steady increase to 1.6 percent in 2015. Post 2015, growth is expected to be between 2 percent and 3 percent. The CBB stated the “economic growth forecast is based principally on expectations for the tourism sector and on major investment projects planned by the private sector and by Government.”