The Central Bank of Barbados (CBB) said on Tuesday, July 12, that the country’s economy grew by 2.1% during the first six months of the year and is on course to achieve “modest growth” in the region of 2.1% this year.
In a review of the local economy, the CBB said after two years of decline, winter tourism rebounded and the sector grew by 5.5% during the first half of the year.
It said the growth in non-tradables had been slower, with increases in whole sale and retail estimated at 2% while the construction industry grew by 3.8%.
But even as the island welcomed the increase in winter tourism, the CBB said there had been no build up in foreign exchange reserves as tourists spent less while vacationing on the island.
“Nonetheless reserves remain more than adequate at the equivalent of 20 weeks of import. Business profitability has not recovered and corporation tax receipts fell short of expectations. This made it difficult for government to meet financial targets in spite of the increase in the VAT (Value Added Tax) rate and restraint on discretional spending,” the Central Bank said.
It added that the real growth in Gross Domestic Product (GPD) in the first half of the year is estimated at 2.1%.
According to the CBB, the United Kingdom market continues to be a bright spot in the tourism recovery with arrivals to May posting a 14% increase over the same period a year ago.
Arrivals from Caribbean destinations grew by about 2% to May and the CBB said this was due to several sporting events including the West Indies Cricket Board’s One-Day international series and the CARIFTA Swimming Championships.
The CBB said the economy remains on course to achieve modest growth in the region of 2.2% this year, provided there is no slowdown in the tourism sector.
“The construction sector could also see further measured expansion with some contribution from foreign inflows, mainly to finance tourism related projects,” the CBB added.
“As a result growth of these two sectors which make a major contribution to employment, the rate of unemployment is expected to continue to ease. There are no inflationary pressures from domestic demand, but inflation expectations are very uncertain, because of the unpredictability of import prices, especially for petroleum,” the Central Bank said.
[Source: CMC]
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