Bridgetown.
Barbados is on the verge of a another economic recession, this is the view of the president of the Barbados Economics Society President, Ryan Straughn.
Speaking to Trakker News after the quarterly review of the Central Bank showed the economy contracted by 0.4 percent for the first quarter of the year.
“The truth is the economy is likely to be back in recession next quarter because the first quarter is the strongest quarter. Generally speaking you would have relatively strong growth in the first quarter and then maybe the rest of the year may not pan out and therefore the growth actually pegs back,” Straughn said.
“So when you start in negative territory there is nowhere else to go but down from here and so unless there is big turnaround in something, which I am yet to see, then it is difficult to see the economy growing at all for the rest of the year. I think the recession will return and in those kind of circumstances then it means obviously less activity in the economy", the economist said.
“At least before we were growing but growing fairly sluggishly, but when you start declining then things can start to unravel very quickly because businesses are already suffering, they have used a lot of their reserves already and at this point I don’t know that there are a lot of reserves left to weather the storm. So I am very concerned to be honest,” he added.
Straughn said while Government had articulated and was implementing a policy seeking to dampen domestic spending while protecting the reserves, this was counterproductive because it forcing businesses to close because of reduced purchases of their products and services by consumers.
This, he added, was made worse by Government’s spending and in light of the current challenge, which was leading to a change in fiscal policy as enunciated by Dr DeLisle Worrell the Governor of the Central Bank Governor, Straughn said Government now had few options.
He said it was regrettable that the Central Bank was trying to do “damage control” and sympathised with Worrell, suggesting the governor could not tell the public whether or not the Freundel Stuart Administration was accepting his best advice.
“At no time has the Government actually sat down and reduced expenditure and that is essentially where the problem lies. So whether it’s divestment, some privatisation, whatever term they wish to use, whether it’s actually laying off some workers, whatever it is, they need to do something and they should have done it ever since, … sooner rather than later,” Straughn stated. ”
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