The Central Bank of Barbados released it’s economic review of Barbados’ 2015 economic performance on January 19, 2016. Below is a summary of the review with an emphasis on the areas that impacted the private sector.
- There was an increase in airlift from major source markets – UK, Canada, US which contributed an estimated 5% increase in revenue for the sector.
- It has been reported that despite the increase in airlift, tourism operators have not experience a significant level of spending by tourists.
- Labour costs have risen by 1% compared to 2014.
- Many companies are taking advantage of the Energy Smart Fund established by Government which has resulted in many business using solar powered electricity.
- This fund facilitates subsidised loans and provides grants to businesses for energy efficient projects.
- Overall there was a 48% growth in the generation of electricity from solar power compared to 2014.
Financial Services Sector
- There has been continued growth in the number of international businesses establishing themselves on the island. The number of new licenses increased by 6% in comparison to the previous year.
- This sector has experienced a marginal decline with 2 banks winding up their operations in 2015.
- It should be noted that despite the projected growth of 0.5%, Barbados still faces many challenges some of which include:
- a high fiscal deficit which stood at 6.9% of GDP;
- a high debt level which includes loans funded by the National Insurance Scheme and the Central Bank of Barbados; and
- negative credit ratings by S&P and Moody’s. These negative ratings impact the country’s ability to borrow foreign debt and attract foreign investment into the island.
Despite the positive outlook given by the Governor, it can be concluded that Barbados’ business environment will remaining challenging.
– Rashida Parasram, Managing Director MPR Consulting