BIBA’s Executive Director, Henderson Holmes, making a point to Minister of Finance and Economic Affairs, Chris Sinckler, while BIBA president, Mohammed Patel, listens attentively. (C. Pitt/BGIS)
Even though the island’s economy is showing modest signs of growth in some sectors, Minister of Finance, Chris Sinckler, has reiterated that overall economic recovery will be slow and painful.
He made this observation earlier this week, while addressing a Barbados International Business Association’s (BIBA) luncheon at Hilton Barbados.
The Finance Minister said that provisional data on Barbados’ economy showed growth of 0.3 per cent last year, after recording a contraction of 4.7 per cent in 2009.?? Additionally, there were also positive signs of expansion in the tourism sector, and the net international reserves at the end of 2010 stood at $1.4 billion, which was enough to cover 20 weeks of imports.
Mr. Sinckler also revealed that the country’s Gross Domestic Product (GDP) would decrease to about 7.8 per cent, after reaching a high of 9.4 per cent of GDP in 2009.?? There was also marginal growth in non-sugar agriculture, while the international business and the financial services sector continued to struggle despite increased company registrations in 2010.
Despite these modest milestones, he pointed out that the island’s economy was linked to its international trading partners and growth would only occur when their economies showed signs of progress.
"Our recovery, not unlike that of our major trading partners, has, and will continue to be, slow, painful and dotted with periods of bad news and some uncertainty.?? Let us not romanticise ourselves about our own abilities to procure economic expansion in Barbados… The cold hard reality is that given our heavy dependence on the international economy, economic growth, or decline as it were in Barbados, is inextricably linked to the fortunes of our major trading partners.?? When they grow, we grow.?? When they decline, we decline as well," Mr. Sinckler surmised.
The Finance Minister acknowledged that despite text book theorising on fiscal restraint, governments would have little or no choice but to "engage fiscal expansion if it is to have any hope of keeping the very fabric of its communities together".
He added: "The question, to my mind, is not if it will be done, it is when, and to what extent.?? Even more importantly, at what time are we going to set a course to pull back from such necessary adventures."
Mr. Sinckler advised technocrats to see the recessionary period as an opportunity to forge a new platform for structural reform in the economy and not just settle for the small gains in an expanded GDP.