The best-case scenario for economic growth of 14.2 per cent this year is possible, but a lot will depend on how well the Government manages the COVID-19 pandemic.
This is the view of Barbados-born international economist Carlos Forte, who told Barbados TODAY that the island becoming a “COVID hotspot” as well as measures taken by the county’s tourism source markets will be significant determinants in what economic activity will look like in 2022.
Referencing the popular term coined by James Carville in 1992 during the US election campaign that year, Forte said “it’s the COVID management, stupid”.
Forte was reacting to the latest economic review by Central Bank Governor Clevistons Haynes.
In delivering his review on Wednesday, Haynes said he was optimistic about economic growth given the encouraging large-scale tourism development projects set to get started this year, infrastructure upgrades by the Government, and other smaller private sector investments that should provide a further boost to the revival of economic activity.
“The Bank has developed multiple scenarios for growth but is optimistic that, minus the reimposition of travel restrictions or the deepening of the supply chain disruption or significant geopolitical shocks, there is potential for a robust recovery leading to double-digit growth in 2022,” said Haynes.
However, Forte said while officials in Barbados were attributing most of the uncertainty to global shocks, he believed a lot of the responsibility lay squarely within the island’s borders.
“If the infections are contained and put on a downward trajectory, if the curve is flattened and that is managed sufficiently, then what happens is that you have an environment where domestic economic activity can thrive, people can get back out to work, employers are not losing employees on account of being in isolation or self-quarantine,” the economist said.
“Also, for tourists and Barbadians in the diaspora who may be inclined to visit, where Barbados isn’t a hotspot as it currently is, there is less of a deterrent to travel. With respect to decisions taken by the developed countries with respect to halting their flights or encouraging the airlines to stop flying, that is an evolution of the pandemic within their borders but it also speaks to destinations,” Forte added.
He noted that although the economy witnessed 1.4 per cent growth last year and is expected to see a double-digit growth rate this year, the fact that there was a decline of 14 per cent in 2020 meant that the economy would only then start to emerge from its economic doldrums.
“Should the economy grow by 14 per cent like the Pre-Election Economic and Fiscal Update Report from the Ministry of Finance suggested, then clearly the Barbados economy would have emerged from the recession [in the face of] the COVID lockdowns and be more or less around 2019 levels,” said Forte.
“I think it is entirely possible for that outturn. It is definitely in the realm of possibility. But everything, as the governor himself indicated, is dependent on how the pandemic is managed over the course of the next 11.5 months.”
Although stressing that he was not discounting that international events would have an impact on economic growth, Forte, lamented there was too much uncertainty surrounding large investment projects and a robust return to the island’s bread and butter tourism industry.
He also pointed to the need for more targeted restrictions and for ramped-up investment in technology to allow for work and business to take place more remotely.
Pointing out that scientific studies have shown that the pandemic could last for up to four years, Forte said it brings into sharp focus “how we manage the pandemic and how we are able to mitigate spikes or infections that are very disruptive to the economy.”
“That really is the key, the extent to which this optimistic forecast can be realised or not,” he added.
He also cautioned the Mia Mottley-led administration on its current approach in speaking about the management of the pandemic, stating that “it is somewhat disappointing that the Government’s COVID management seems to be one of individual responsibility”.
“It is almost as if the Government has thrown its hands in the air and declared they are not minded to utilise the levers of the state to contain the virus or to avoid transmission or exposure.
“That speaks to the policies with respect to the airport screening, and also speaks to targeted containment of certain types of activities that lend themselves to spread, to mitigate what we have been seeing for the past three weeks. And, of course, the general election did not help. So these are the types of issues that are really going to be front and centre with respect to the extent to which the economy will rebound as well as it has the potential to, as suggested by the central bank. So, it’s the COVID management, stupid,” said Forte.
Pointing out that other jurisdictions were beginning to see faster growth rates because they were “managing the pandemic”, Forte added the current midnight to 5 a.m. curfew could be abandoned.
“The mantra that we must learn to live with COVID does not mean throwing your hands in the air and we just go about our business. Learning to live with it means adapting – adapting our lives to be able to do the things we would want to do whilst mitigating the prospect of being infected or infecting others,” he contended.