Jamaica Observer- Despite Barbados recording 10.5 per cent growth in gross domestic product (GDP) in the first half of 2022, the central bank in that country indicated that it will revise growth projections for the year.
In its review of the economic performance for January – June 2022, the Central Bank of Barbados (CBB) said the economic growth was due to “a slightly better than forecast rebound in tourism”.
“Tourism-related activity has yet returned to pre-pandemic levels, but the easing of the protocols opened the way for increased domestic spending enabled the labour market to show signs of a return to normality,” the review outlined.
During the second quarter, long-stay arrivals reached 55 per cent of 2019 levels as key source markets relaxed COVID-19 containment measures which contributed to strong tourism demand. Compared to the April – June 2021 period, airlift capacity doubled while airfares rose above pre-pandemic levels.
Tourism growth was led by Barbados’ traditional markets of the United Kingdom, United States and Canada. Regional travel, however, continued to recover at a slow pace.
The April –June 2022 period was the fifth-consecutive quarter of growth for Barbados.
The CBB said that the country continues to feel the effects of inflationary pressures stemming from the Russia-Ukraine war, which has also amplified the cost increase in the shipment of goods and commodities due to supply chain bottlenecks.
“Sharp increases in imported food and energy prices had significant pass-through effect on domestic prices, prompting interventions by Government to soothe the burden on consumers,” the central bank outlined.
As at May 2022, point-to point inflation rose by 5.8 per cent, reflected in the price of meat, bread and cereals, oils and fats, dairy and fish. There were also increases in electricity and transportation costs, as and the costs of inputs in the construction sector, which rose sharply.
In this regard, the CBB explained that the risks associated with inflation were signalling a “dampening of growth prospects”.
In its outlook, the bank said, “The domestic macroeconomic environment will continue to be affected by the global instability as the surge in global prices has intensified short-term growth challenges associated with the pandemic. The policy response of raised interest rates in industrialised economies has created fears of a new recession and the IMF has tempered its global growth forecast in light of this uncertainty.”
Notwithstanding, it pointed out that Barbados’ recovery hinges on the “sustained revival of the tourism sector and the accelerated implementation of investment projects”. So far, bookings for the second half of 2022 are “encouraging”, and the Government expects that the opening of the Wyndham Sam Lords property will boost tourism demand.