The Central Bank of Barbados (CBB) Wednesday predicted that the local economy will “rebound gradually in 2021” but warned that the extent of the recovery will depend on several factors including the effectives of policy measures in spurring a revival.
The CBB in a review of the island’s economic performance for the first nine months of the year, said that the coronavirus (COVID-19) pandemic continues to “create substantial challenges’ for the Barbados economy and that the reopening of the borders following the closure in March, had eased the economic contraction.
“However unfavourable health and economic conditions in source markets and the prevailing uncertainty associated with travel protocols led to only a mild restart of tourism activity. As a result, economic activity for the quarter remained well below 2019 levels, falling by an estimated 18 per cent, and preliminary data now suggests that economic outlook declined by over 16 per cent during the first nine months of 2020.”
“This could restrain the recovery of tourism earnings and dampen the recovery of the ancillary sectors that support the industry.”The Central Bank of Barbados
The CBB said Barbados experienced a third successive quarter of double digit decline in economic output due to the pandemic.
“The deep recession reflects the pass through effects on the rest of the economy of the absence of any significant tourism sector activity. The labour market continued to face elevated levels of unemployment, but the growth in unemployment claims slowed during the quarter. Unemployment benefits paid out have exceeded BDS$120 million (One BDS dollar=US$0.50) since the onset of the crisis and cushioned the loss in employment income,” the CBB said.
It said that tourism output recorded an estimated 66 per cent decline in the first nine months and long stay arrivals during the period “were negligible”
Non-sugar agricultural sector grew by 2.9 per cent as good weather help boost production.
The government recorded a small fiscal deficit of BDS$22 million for the first half of the financial year. The primary surplus contracted to BDS$154 million compared to the BDS$418 million recorded the previous year.
The BDD said this outcome was well above the targeted performance of BDS$27 million under the International Monetary Fund’s Extended Fund Facility (EFF) and was mainly due to a larger than forecast growth in corporate taxes, which partly compensated for the decline in other taxes.
In its outlook for the island, the CBB said that the island’s tourism planners anticipate a pick-up in the current quarter and a return to near normalcy next year as the island recovers from the impact of the coronavirus (COVID-19) pandemic.
“By November, most hotels and restaurants expect to reopen to accommodate an upturn in arrivals, but the recovery of cruise tourism is likely to be further delayed as scheduled calls continue to be postponed,” the CBB said in its report on the performance of the island during the first nine months of this year.
It said that the persistence of COVID-19 infections in the island’s main source markets and the uncertainty associated with travel protocols are likely to prevent a full return to 2019 levels by 20121.
“This could restrain the recovery of tourism earnings and dampen the recovery of the ancillary sectors that support the industry,” the CBB said.