Barbados

Politics:

• Analysis

  Barbados politics: Quick View - Barbados braces for possible telecoms strik

  Event

  The Barbados Workers' Union (BWU) has announced that it is to take strike action following a specially convened meeting.

  Analysis

  In response to the sacking of 97 Cable & Wireless Barbados (known locally as LIME) workers in the first week of January, the general secretary of the BWU, Sir Roy Trotman, told members late in the second week of the month that strike action would be forthcoming. LIME has been involved in negotiations with the BWU over the dismissal of workers from its retail unit since last August. The company claims that substantial losses have forced it to outsource its retail unit, which will operate a managed services model, under which other firms manage stores on LIME's behalf.

  A date for the strike has yet to be confirmed, but Mr Trotman was keen to stress that he had received the "absolute and total support" of all the divisions and members of the BWU, following a LIME decision to renege on negotiations in the first week of January. Subsequent talks, mediated by the Ministry of Labour, broke down after four hours of negotiation.

  Mr Trotman must now seek permission from the trade union's general counsel to call the strike, which would involve 25,000 workers from a wide range of industries, including agriculture, tourism, transport, banking and finance. Should the general counsel give his approval, action could still be avoided via the involvement of the prime minister, Freundel Stuart. Recent press reports claimed that he was being kept updated on negotiations, suggesting possible last-minute intervention to avoid strike action. A BWU strike would have a significant economic impact on Barbados's small island economy. Given that the government seems keen to avoid such a scenario, and that general counsel approval has yet to be given, we believe that strike action can be averted

  January 14, 2013

• Background

  Barbados: Key figures

  David Thompson

  Currently prime minister, David Thompson was first elected to public office in a by-election after the death of the prime minister, Errol Barrow (1966-76; 1986-87), winning his parliamentary seat in 1987. He served as minister of community development and culture from 1991-93; he was subsequently appointed as finance minister until the 1994 election. At the age of 32, he was chosen to succeed the then-prime minister, Erskine Sandiford (1987-94), as leader of the Democratic Labour Party (DLP) after Mr Sandiford's resignation. Mr Thompson unsuccessfully led the DLP in elections in 1994 and 1999. He resigned as party leader in September 2001 following his third electoral defeat as party leader. However, Mr Thompson regained his position as opposition leader in January 2006 and led the DLP to a decisive victory two years later. In addition to his duties as prime minister, Mr Thompson has direct responsibility for several major portfolios, including economic affairs and development, labour, the civil service, and energy.

  Mia Mottley

  Currently leader of the opposition Barbados Labour Party (BLP), Mia Mottley, a lawyer by profession, was first elected to parliament in 1994; soon after, she was appointed as minister of education, youth affairs and culture. Ms Mottley subsequently served as attorney-general, deputy prime minister (2003-08), and minister of home affairs (2001-06). From 2006 to 2008, she served as economic affairs and development minister. Following the BLP's election defeat in January 2008 Ms Mottley succeeded prime minister, Owen Arthur (1994-2008), as party leader and became leader of the opposition. She comes from an influential family, which has been politically active for three generations in Barbados, Trinidad and Tobago and elsewhere in the Caribbean.

  The judiciary

  The judiciary is independent and effective and is broadly based on English common law with district magistrates' courts for preliminary hearings, a high court and a court of appeal. In 2005 Barbados replaced the Privy Council with the Caribbean Court of Justice (CCJ) as a final court of appeal, and will also use the new court to settle disputes relating to the Caribbean Community single market.

  The legislature

  The legislature is bicameral, with an elected House of Assembly (the lower house) and a nominated Senate (the upper house). The Senate comprises 21 senators appointed by the governor-general: 12 on the advice of the prime minister, two on the advice of the leader of the opposition and seven by the governor-general. Appointments to the Senate can be revoked during the life of a parliament. The House of Assembly has 30 members elected by universal adult suffrage for a period not exceeding five years. Policy formulation in some areas is imaginative and forward-thinking. Administration is generally competent, although decision-making is sometimes subject to delays.

  Media services

  The media is free and broadly non-partisan, giving voice to a fairly wide range of opinions. There are two daily newspapers, The Advocate and The Nation, as well as cable and broadcast television, and a variety of radio stations. Call-in programmes provide an important forum for public discussion.

  July 31, 2008

• Structure

  Barbados: Political structure

  Official name

  Barbados

  Form of government

  British-style representative system

  Head of state

  Queen Elizabeth II, represented by a governor-general

  The executive

  The governor-general appoints the leader of the largest party in parliament as prime minister; a cabinet is then appointed by the governor-general on the advice of the prime minister

  National legislature

  Bicameral; the 21-member Senate (the upper house) is appointed by the governor-general, 12 members on the advice of the prime minister, two on the advice of the leader of the opposition and seven by the governor-general alone; the House of Assembly (the lower house) has 30 members directly elected to represent single-member constituencies for a term of five years

  Legal system

  Based on British law; judicial appointments are made by the governor-general; final appeal rests with the UK Privy Council

  National elections

  Next elections due by early 2018

  National government

  The DLP holds 20 seats in the 30-member lower house; the BLP holds nine seats

  Main political organisations

  Government: Democratic Labour Party (DLP)

  Opposition: Barbados Labour Party (BLP)

  Key ministers*

  Prime minister: Freundel Stuart

  Attorney-general, minister of home affairs: Adriel Brathwaite

  Agriculture, food, fisheries & water resource management: David Estwick

  Commerce & trade: Haynesley Benn

  Environment & drainage: Denis Lowe

  Education & human resource development: Ronald Jones

  Family, culture, youth affairs & sport: Stephen Lashley

  Finance & economic affairs: Chris Sinckler

  Foreign affairs & foreign trade: Maxine McClean

  Health: Donville Inniss

  Housing & lands: Michael Lashley

  Industry, small business & rural development: Denis Kellman

  International business & international transport: George Hutson

  Labour & social security: Esther Byer-Suckoo

  National security, public service, immigration & urban development: Freundel Stuart

  Social care, constituency empowerment & community development: Steve Blackett

  Tourism: Richard Sealy

  Transport & works: John Boyce

  *Post-election cabinet changes yet to be announced at time of writing

  Central Bank governor

  DeLisle Worrell

  March 12, 2013

Economy:

• Background

  Barbados: Economic background

  GDP per head was US$11,237 in 2005 (the latest available actual data), higher than most other countries in the 14-member Caribbean Community (Caricom). Tourism is the main industry, but the economy is relatively broad-based. Offshore finance and informatics are important foreign-exchange earners and there is also a light manufacturing sector. The sugar industry, once the mainstay of the economy, has declined, but remains an important employer and exporter. Fishing and livestock, dairy and vegetable production are focused on the local market. Infrastructure is well developed by Caribbean standards, as are the healthcare and education systems.

  Gross domestic product by sector
  (constant 1974 prices; Bd$ m where series is indicated; otherwise % change year on year)
  	2001	2002	2003	2004	2005
  Sugar	21.4	19.3	15.6	14.8	16.4
  	-14.7	-9.8	-19.2	-5.1	10.8
  Non-sugar agriculture & fishing	34.0	33.8	35.4	33.3	36.3
  	-5.8	-0.6	4.7	-5.9	9.0
  Mining & quarrying	9.4	10.0	8.4	9.2	9.9
  	-10.5	6.4	-16.0	9.5	7.6
  Manufacturing	62.5	63.2	62.1	63.5	64.9
  	-9.9	1.1	-1.7	2.3	2.2
  Electricity, gas & water	35.6	36.9	38.0	38.7	38.5
  	4.4	3.7	3.0	1.8	-0.5
  Construction	78.2	84.2	84.7	87.1	98.8
  	6.8	7.7	0.6	2.8	13.4
  Wholesale & retail trade	183.5	185.7	193.2	204.9	215.2
  	-3.1	1.2	4.0	6.1	5.0
  Tourism	147.9	143.8	153.8	168.2	164.4
  	-5.9	-2.8	7.0	9.4	-2.3
  Transport, storage & communications	82.4	80.0	82.3	86.8	91.1
  	0.7	-2.9	2.9	5.5	5.0
  Business & general services	164.8	161.0	168.2	175.3	183.1
  	-0.7	-2.3	4.5	4.2	4.4
  Government	132.2	140.7	135.5	143.1	148.1
  	-1.6	6.4	-3.7	5.6	3.5
  Total	951.9	958.6	977.2	1,024.9	1,066.7
  	-2.6	0.7	1.9	4.9	4.1
  Source: Central Bank of Barbados, Annual Statistical Digest, 2006.

  Download text file (csv format)

  July 31, 2008

• Structure

  Barbados: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012a
  GDP at current prices (Bd$ m)	8,687.4	8,793.3	8,490.4	8,638.3	8,712.5
  Real GDP growth (%)	0.3	-4.1	0.2	0.8	0.0
  Consumer price inflation (av; %)	8.1	3.6	5.8	9.4	4.8b
  Population (‘000)	272.0	273.0	273.0	274.0	275.0
  Exports fob (US$ m)	489.6	381.0	430.7	476.7	437.7
  Imports cif (US$ m)	-1,832.5	-1,366.3	-1,507.4	-1,606.4	-1,437.7
  Current-account balance (US$ m)	-486.5	-310.2	-258.6	-365.9	-249.5
  Current-account balance (% of GDP)	-11.2	-7.1	-6.1	-8.5	-5.7
  Reserves excl gold (US$ m)	738.5	871.2	833.5	812.6	785.2b
  Total external debt (US$ m)	989.0	1,112.6	1,356.0	1,379.0	1,315.4
  Exchange rate (av; Bd$:US$)	2.0	2.0	2.0	2.0	2.0
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2012	% of total	Components of gross domestic product 2011	% of total
  Agriculture, forestry & fishing	4.1	Private consumption	74.3
  Manufacturing & mining	4.7	Government consumption	19.2
  Construction & utilities	11.0	Gross investment	14.8
  Tourism	11.8	Exports of goods & services	47.1
  Wholesale & retail trade	22.2	Imports of goods & services	54.5
  Business, general services, transport & communications	29.9
  Government services	16.4
  Principal exports 2011	% of total	Principal imports 2011	% of total
  Manufacturing	30.1	Consumer goods	37.6
  Chemicals	26.1	Food & beverages	17.6
  Rum	13.1	Intermediate goods	45.5
  Crude oil	13.7	Fuel	5.1
  Other food & beverages	2.3	Construction materials	24.2
  Sugar	3.9	Capital goods	16.5
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  Trinidad and Tobago	18.5	Russia	38.3
  France	10.4	Trinidad and Tobago	35.8
  US	9.5	US	26.7
  St Lucia	8.6	China	8.8
  St Vincent and Grenadines	0.0	UK	3.6

  Download the numbers in Excel

  Download text file (csv format)

  March 12, 2013

• Outlook

  Barbados: Country outlook

  Barbados: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Barbados will remain one of the most politically stable countries in the English-speaking Caribbean, owing to low levels of corruption and a business-friendly, open economy. The Democratic Labour Party (DLP) obtained a narrow victory in the February 21st 2013 elections, but the country's economic woes will continue to challenge the incumbent prime minister, Freundel Stuart. After a protracted period of economic weakness, including stagnant growth in 2012, the Economist Intelligence Unit expects GDP to expand only modestly in the 2013-14 forecast period, owing to the need to keep fiscal policy tight and a still weak global outlook. A series of consolidation efforts, coupled with a rise in taxes, will help to bring the fiscal deficit down to 3.6% of GDP by 2014. More fiscal tightening is expected this year, now that the election is over. The Central Bank of Barbados will continue to prioritise its support of the fixed exchange-rate (set at Bds2:US$1) and maintain an accommodative policy stance, aided by a moderation of inflation after a 2011 spike. The current account will average 6.3% of GPD in 2013-14, but will remain structurally large, owing to the country's large import requirements.

  DOMESTIC POLITICS: The economy has struggled to recover from the 2009 global crisis and this has led to significant dissatisfaction among the population. Mr Stuart, who took over the reins as prime minister following the death of David Thompson (2008-10) in October 2010, unexpectedly won the February general election by a narrow margin. This time around, the DLP only managed to secure 16 out of 30 seats in parliament, a loss of four compared to the previous term. Despite these losses, the electoral victory offers Mr Stuart a second chance at tackling the island's economic woes, which have been the main concern among Barbadians and also the main reason behind his low popularity heading into the election. Since 2008, GDP has grown by less than 1% each year, including a relatively steep recession in 2009 and stagnation in 2012. The government's policy options are relatively limited, as the economic outlook will continue to depend largely on a sustained improvement in external demand (a situation that looks increasingly unlikely, owing to weak forecast demand from the US in the short term). Policy options will also be limited by the large fiscal deficit and deteriorating public sector debt ratios, which will force the government to adopt unpopular measures to boost revenue and keep expenditure in check. A sharper focus on immigration policy will remain popular among the electorate, much of which sees immigration as a reason for the current high rates of unemployment among Barbadians. On the positive side, the leeway offered by the electoral victory will help the government to take more drastic and unpopular measures to boost the economy and improve the fiscal outlook.

  INTERNATIONAL RELATIONS: Barbados will continue to place emphasis on economic and cultural co-operation within the Caribbean region through the Caribbean Community (Caricom), and on the development of a common Caricom position on trade with North America and Europe. However, an initiative to establish a Caribbean Single Market and Economy among Caricom members was put on hold following an early July 2012 meeting in St Lucia, and a tentative 2015 deadline has been suspended. Relationships with the US and the UK are strong, and co-operation with both countries on drug-trafficking, money-laundering and drugs transshipment issues will remain a high priority. Government interest in boosting the island's profile as an offshore financial centre has led to numerous tax arrangements with its trade and investment partners, and we expect further progress in this area throughout 2013-14.

  POLICY TRENDS: The government has prioritised fiscal consolidation in order to bring down the public sector deficit to manageable levels, and we expect greater efforts to this end now that it has secured a second term. However, weak real GDP growth will complicate these efforts and will likely force the government to adopt more drastic measures, such as new or higher taxes and wage freezes on public sector workers. Heavy dependence on external economic conditions, particularly in the US, will limit policies to boost domestic demand, and unemployment will remain high compared with historical averages. However, on the positive side, Barbados will continue to benefit from an open, liberal economy, with little corruption and an educated workforce. This will prompt greater diversification of economic activity into areas such as provision of business and financial services, owing to Barbados's status as a growing offshore financial centre. Tourism will nevertheless continue to play a vital role as the country's single most important economic sector and the government will seek to attract a greater number of visitors and investment from faster-growing markets, such as Latin America and China. The country's fortunes in attracting greater tourism revenue will also largely determine the recovery of the construction sector, which was one of the hardest-hit sectors during the 2008-09 downturn and remains in a slump. In terms of monetary policy, there is an ample stock of foreign reserves, which will be supportive of the exchange-rate peg, thereby helping to underpin confidence in monetary stability. Following a massive fiscal deficit of 9.1% of GDP in 2010/11 (April-March), consolidation efforts-coupled with a rise in taxes-have helped to bring the deficit down to 4.7% of GDP in 2011/12, but it crept up to 6.4% of GDP during April-December 2012, as revenue has fallen by 2.1% year on year and spending increased by 2.2%. Such deficit levels are high compared with historical figures and are well above sustainable rates in the medium term. Although we expect the deficit to fall to below 4% of GDP by 2014, this forecast is subject to the risk of weaker than expected global growth (particularly in the US), which would have significant knock-on effects on domestic revenue. The Economist Intelligence Unit estimates government debt at 82.9% of GDP in 2012, a slight increase over 2011 and over half as much the debt stock held at end-2005. We expect public debt to peak at 84.3% of GDP in 2013, before falling modestly, but it is not likely to fall to pre-crisis levels (around 50% of GDP) during this decade. External debt represents less than 30% of the total, which, although high, is not excessive for such a small and open economy. The IMF has recommended that fiscal adjustment include the removal of zero-rate value-added tax, as well as a reduction in tariffs charged by some public sector companies (mainly transport and water), and this is likely to be given greater consideration now that the electoral period is over. Further attempts to reform the budget-management process, as well as efforts to overhaul the pension system, could also be forthcoming.

  ECONOMIC GROWTH: Barbados has struggled to recover from the fall-out of the 2008-09 global financial crisis, resulting in five straight years of mediocre growth, below 1%. Official estimates have GDP growth stagnating in 2012, and we do not expect a vigorous recovery in the two years ahead. Furthermore, the need to keep fiscal policy tight will impair growth, given the still large deficit, and will preclude the possibility of stimulus measures to kick-start the economy. Like most small, open economies in the Caribbean, Barbados is heavily dependent on external demand, particularly from the US-which represents its main source of tourism (and investment)-but also from the UK and, increasingly, Latin American economies. The tourism sector alone accounted for 11.8% of economic output in 2012 and could represent as much as 40% if indirect spillovers into real estate, construction and retail are included. Construction, which grew by 7.5% in 2011, contracted by 0.4% in 2012 (the fourth such contraction in five years) and is unlikely to see a more robust revival until the tourism sector recovers some of its earlier dynamism. Although there are signs that the latter is emerging from its slump-visits in 2012 exceeded their pre-crisis peaks for the first time-stronger consumer demand in the US and UK in 2013-14 will be key to ensuring a full-fledged recovery. Sluggish domestic performance will also weigh on GDP growth, as unemployment crept up to 11.7% (the fourth consecutive year of double-digit rates), real wage cuts hit private consumption and the fiscal consolidation needed to bring down the deficit limits government spending. On the upside, agriculture will recover from a poor sugar harvest in 2010-11 and reforms to boost transparency in the financial sector will help to reverse some of the difficulties facing offshore markets as a result of tighter global regulation. In addition, the country's attractiveness for healthcare tourism will also be boosted by a US$100m state-of-the art hospital and research space.

  EXTERNAL ACCOUNT: As in most Caribbean economies, the external sector is vital to Barbados in order to finance its dependency on foreign manufactures and to obtain the necessary reserves to sustain the exchange-rate peg. The current-account deficit narrowed to 5.7% of GDP in 2012, down from 8.5% of GDP in 2011 and we expect it to average 6.3% in 2013-14, roughly consistent with historical trends (notwithstanding the high deficits seen during the pre-crisis commodity boom). The structurally high level owes largely to the country's large import requirements, in addition to commodity prices remaining well above their historical averages. At 19% of GDP in 2013-14, the services surplus will be the largest positive contributor to the current account, supported by a relatively strong pick-up in tourism revenue in 2012. However, there is growing concern regarding US rum subsidies to Puerto Rico and the Virgin Islands, which could erode market share for what is one of Barbados's most important exports. On the positive side, business and financial services rank second to tourism, owing to Barbados's status as an offshore banking centre and also as a destination for information technology outsourcing. However, higher labour costs and increasing regulation on offshore centres will constrain short-term growth in these sectors. Merchandise exports will suffer from sluggish industrial performance and unpredictable agricultural conditions (a drought hit the country's sugar harvest in 2010/11 and production has recovered only modestly). Barbados will continue to run a moderate income deficit and the low level of remittances received will be partly offset by transfers abroad. Overall, we expect the current-account deficit to be financed adequately by capital inflows, particularly private flows (which shrank significantly during the recession in 2008-09, but are bouncing back), as well as official inflows from multilateral lenders for infrastructure and budgetary support.

  March 13, 2013

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Country Briefing

Land area

431 sq km; the most easterly of the Caribbean islands, situated 460 km north-west of Venezuela

Population

274,000 (2011 estimate)

Main town

Bridgetown (capital), population 96,578 (2006)

Climate

Sub-tropical

Weather in Bridgetown (altitude 55 metres)

Hottest months, June-August, 23-31°C; coldest month, February, 21-28°C (average monthly minimum and maximum); driest month, February, 28 mm average rainfall; wettest month, November, 206 mm average rainfall

Language

English

Measures

Metric system

Currency

Barbados dollar (Bds$) = 100 cents; the Barbados dollar is pegged to the US dollar at an exchange rate of Bds$2.00:US$1

Time

4 hours behind GMT

Public holidays

January 1st; January 21st (Errol Barrow Day); April 28th (National Heroes' Day); Good Friday; Easter Monday; Whit Monday (seven weeks after Easter Monday); May 1st (Labour Day); August 1st (Emancipation Day); First Monday in August (Kadooment Day); First Monday in October (UN Day); November 30th (Independence Day); December 25th-26th

March 20, 2012