Economic Growth in Barbados: Governor of Central Bank Cautions It Will Take Time to Impact All Sectors

Governor of the Central Bank of Barbados Dr Kevin Greenidge says that while the economy is growing, it will take time to be “felt in all sectors at all levels”.

However, the economist sees evidence of real economic growth on the island, adding that, as is normally the case, this is most evident in the corporate sector.

Greenidge also believes that while prices remain high in supermarkets and other places, they will ultimately moderate, and that as the economy grows and people get more income they will feel less of the negative inflation effects.

He was speaking in a Central Bank interview marking a year since his March 1, 2023 appointment at the helm of the country’s monetary authority.

In a wide-ranging conversation with the bank’s chief of corporate communications Novaline Brewster, Greenidge was asked about public concerns that signs of macroeconomic recovery had yet to fully trickle down into the society.

“Economic growth takes a while to . . . be felt in all sectors at all levels. When an economy begins to grow the first thing you will see is improvement in corporates, and the evidence is there,” he said.

“There are more [value added tax] receipts coming in to the [Barbados] Revenue Authority. In discussions with the banks, you will find that their corporate loan book and corporate services are expanding tremendously. Companies start to hire more persons, they start to do more work, they start to invest more, and by hiring more persons that’s the trickle down effect that persons are referring to.”

Higher demand

He continued: “So a company decides now ‘oh business is looking better, there is higher demand, so bring on one or two persons, we pay them a little more etc and then you get that effect’, so it takes a while.

“Remember, just two years ago our economy collapsed by 14 per cent, it rebounded in 2022 and stabilised and grew in 2023, so it takes a while. But if you look around, in general you will see evidence

of that economic growth, you see much more construction activities, you see just in persons going out and dining out, you see that there is increase demand, you see at every social event persons are there, you will find people are shopping more.”

The Governor also acknowledged the concern about high prices which started during the COVID-19 pandemic period when global supply chains were severely disrupted. This was exacerbated by subsequent shocks including the war in Ukraine.

“Inflation, even . . . with all of the mediation efforts that government would have been involved in, like capping VAT on fuel, reducing VAT on electricity, the social compact, prices have increased and have remained relatively high, with inflation increasing by about ten per cent over the two-year period,” he noted.

“So prices have been increasing, so even with the wage increases etc prices still are higher and this will take a while to slow down and taper off. Hopefully, as the economy expands, and productivity improves and persons have even additional compensation it starts to catch up [with inflation].” (SC)