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Barbados economy expected to show growth in 2015

Barbados economy expected to show growth in 2015

Posted by Shanelle Weir on October 23, 2014

The Barbados economy is expected to grow by two per cent per cent next year with the Central Bank reporting that fiscal adjustment measures have reduced the deficit by nearly one per cent of gross domestic product (GDP) so far this fiscal year.

In an analysis of the island’s current economic performance, the Central Bank of Barbados is also predicting that the island’s economic growth will increase to 2.3 per cent in 2016.

It said the local economy is firmly set on the path to sustainable growth, led by the sectors and activities in which Barbados has a demonstrated comparative advantage over the competition, in terms of quality, productivity and the strength of the local brand.

The Bank said that at the end of September, the stock of foreign reserves was BDS$1,066 million (One BDS dollar =US$0.50 cents) equivalent to 15 weeks of import cover.

The Central Bank noted that the fiscal adjustment measures have reduced the deficit by 0.9 per cent of GDP so far this fiscal year and that the measures already in place are forecast to yield an additional one per cent and a recovery of revenue is expected to yield an additional two per cent.

“Further revenue enhancement and expenditure adjustment equivalent to 2.0 per cent of GDP will be required in the second half of the fiscal year, to bring us to the target deficit of 6.6 per cent of GDP,” the Central Bank said, noting that so far this year, the fiscal deficit of BDS$360 million has been financed largely by a reduction in government deposits with the banking system, to the tune of BDS$235 million.

“The remainder of the deficit was financed by the drawdown of the government’s deposits at the Central Bank and by the NIS National Insurance Scheme). An additional financing requirement of about BDS$205 million is anticipated for the remainder of the fiscal year. Barbados’ net public sector debt at end-September was equivalent to 75 per cent of GDP, up from 67 per cent at the end of last year” the Central Bank said.

It said that the tourism sector, one of the main pillars of the local economy “has begun to turn around” and that  arrivals increased eight per cent from the United Kingdom, the market which has always recorded the highest expenditure per tourist.

The Central Bank predicts that airlift from the United States and Canada will increase by nine and 20  per cent respectively, in time for the coming winter season.

“Tourism value added is estimated to have increased 0.1 per cent so far for the year,” it said.

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