Barbados Economic Growth for 2007
New Central Bank figures show the Barbados economy grew by 4.3 per cent in 2007. It was the sixth consecutive year of economic expansion for this 166 square mile Caribbean island and compared with an average 3.1 per cent growth over the last five years.
The upward trend was driven by a strong performance by the all-important tourism sector – both the long stay visitors and the cruise segment.
Thanks mainly to increased traffic from the United Kingdom and some non-traditional markets, real tourism value rose by an estimated 3.3% in 2007, compared with the 1.6% growth registered in 2006.
In contrast, higher Caribbean air fares and airline route rationalisation forced Barbados visitor arrivals from the CARICOM countries down by 16.0%, after consistent growth in the previous five years.
The Barbados Central Bank in a statement on 2007 performance also reported an expansion in the island’s net international reserves (NIR) of $353.5 million, the largest accumulation since 2001.
Said the report: “The build-up in foreign reserves contributed to a faster rate of growth in domestic deposits, which outpaced the rate of increase in credit to the non-financial private sector. Consequently, the level of liquidity in the banking system rose and government was able to finance its deficit from domestic sources.”
Barbados sugar production rose marginally (0.6%) for the year to 33,900 tonnes, while non-sugar agriculture and fishing expanded, by 4.2%, a reversal from the 2.9% fall experienced during the 12 months.
The growth in construction was 5 per cent, two percentage points below the 2006 performance.
The production of electronic components declined by 18.6%, in contrast to growth of 5.9% in the previous year. Additionally, the manufacture of garments, wooden furniture and non-metallic products contracted by 10.0%, 0.5% and 2.8%, respectively.
Some 470 new licenses were issued to international business and financial services firms in 2007, compared to 537 in 2006. The number of new International Business Companies registered fell by 57 to 334.
In addition, six new exempt insurance companies, one exempt insurance
management company and three new offshore banks were approved for
Unemployment continued to decline. The average unemployment rate in Barbados at September 2007 was 7.1%, down from 9.8% in the corresponding period of 2006.
For men, the rate fell by 4.0 percentage points to 5.4% and for females by 1.4 percentage points to 8.9%.
There was also good news on the inflation front: at the end of October 2007, the twelve-month moving average rate was 4.2%, compared to 7.6% for the corresponding period of 2006. This contraction, the Central Bank said, largely reflected the slowdown in the growth rate of prices for fuel and light, transportation and housing.
On the banking front, robust growth in domestic deposits in 2007 outpaced new commercial bank lending to the non-financial private sector. The result was that there was excess liquidity in the banking system.
The liquid asset ratio increased from 7.9% at the end of December 2006 to approximately 10.1% at the end of 2007. Additionally, the excess liquidity ratio rose from 6.6% to 9.7% while the excess cash to deposit ratio grew from 0.6% to 2.2%.
February 10th, 2008