Global Recession Hits Barbados

A slowdown in development across Barbados’ famed “platinum coast” is one of the early casualties of the global recession tsunami now rushing up on the island’s shores.

In her review of Barbados’ performance over the past nine months of 2008, Governor of the Central Bank of Barbados Dr Marion Williams reported last week that some activity on the Barbados west coast had “stalled” as the global credit crunch had caused some international investors to “pause”.

And, she told reporters gathered at the Central Bank headquarters in the Tom Adams Financial Centre, Bridgetown, that construction activity across the island on a whole was contracting as new commercial and residential real estate developments were put on hold.

So far, this slowdown has had a telling effect on employment levels as the unemployment rate in Barbados rose from 6.7 percent at the end of December 2007 to 8.6 percent at the end of June 2008 on the back of job losses concentrated in the utilities, construction and distribution sectors, according to the governor.

And, despite construction activity being slated to go up again next year as more government capital projects come on stream, Dr Williams said the unemployment rate was expected to continue its “gradual rise” in 2009.

In real terms, growth in Barbados’ gross domestic product (GDP) fell by more than half of what was recorded for the same period last year due to the slowdown in global output. Between January and September 2008, Barbados registered GDP growth of 1.7 percent in contrast to the 3.5 percent registered by the third quarter of 2007.

While this is the slowest pace of expansion since 2003, it is yet to hit the dismal lows of 2001/2002 when, post-9/11, the country actually experienced significant negative growth. However, Williams did offer the sobering caveat in her outlook for 2009 that “it would probably be difficult to attain even the growth rate that was obtained in 2008”.

When looked at over the medium term, Williams that the 12-month moving average inflation rate, was 5.8 percent at the end of July, a decrease of 0.6 percentage points when compared to the end of July 2007.

However, a straight comparison between this time last year and now, when measured using the point-to-point rate, showed inflation at 10.2 percent –significantly above the 3.9 percent recorded in the comparable period of the previous year.